NORTHWEST PIPE CO
S-1/A, 1996-10-21
STEEL PIPE & TUBES
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<PAGE>   1
 
   
    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1996
    
 
   
                                                      REGISTRATION NO. 333-13209
    
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------
 
   
                                AMENDMENT NO. 1
    
   
                                       TO
    
 
                                    FORM S-1
                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933

                            ------------------------
 
                             NORTHWEST PIPE COMPANY
               (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
 
<TABLE>
<S>                             <C>                             <C>
             OREGON                           3317                         93-0557988
(STATE OR OTHER JURISDICTION OF   (PRIMARY STANDARD INDUSTRIAL          (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)   CLASSIFICATION CODE NUMBER)        IDENTIFICATION NUMBER)
</TABLE>
 
                            ------------------------
 
                    12005 N. BURGARD, PORTLAND, OREGON 97203
                                 (503) 285-1400
               (ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
       INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                            ------------------------
 
                               WILLIAM R. TAGMYER
                     PRESIDENT AND CHIEF EXECUTIVE OFFICER
                             NORTHWEST PIPE COMPANY
                    12005 N. BURGARD, PORTLAND, OREGON 97203
                                 (503) 285-1400
            (NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

                            ------------------------
 
                                With copies to:
 
   
<TABLE>
<S>                             <C>                             <C>
   GREGORY E. STRUXNESS, ESQ.                                       THOMAS R. DENISON, ESQ.
     STEPHEN M. GOING, ESQ.         ROBERT J. MOORMAN, ESQ.          STEVEN K. TALLEY, ESQ.
   ATER WYNNE HEWITT DODSON &           STOEL RIVES LLP           GIBSON, DUNN & CRUTCHER LLP
         SKERRITT, LLP                900 S.W. 5TH AVENUE        1801 CALIFORNIA STREET, SUITE
 222 S.W. COLUMBIA, SUITE 1800       PORTLAND, OREGON 97206                   4100
     PORTLAND, OREGON 97201              (503)294-9249               DENVER, COLORADO 80202
         (503) 226-1191                                                  (303) 298-5700
</TABLE>
    
 
                            ------------------------
 
        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
   As soon as practicable after the Registration Statement becomes effective.
 
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box:  / /
 
     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.  / /
- ------------
 
     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  / /
- ------------
 
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.  / /
   
                            ------------------------
    
 
     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
 
================================================================================
<PAGE>   2
 
     INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
     REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
     SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
     MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
     BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
     THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
     SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
     UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
     OF ANY SUCH STATE.
 
   
                SUBJECT TO COMPLETION -- DATED OCTOBER 21, 1996
    
 
PROSPECTUS
 
                                2,400,000 SHARES
 
                         [NORTHWEST PIPE COMPANY LOGO]
 
                                  COMMON STOCK
 
   
     Of the 2,400,000 shares of Common Stock (the "Common Stock") offered
hereby, 1,200,000 shares are being sold by Northwest Pipe Company (the
"Company") and 1,200,000 shares are being sold by certain shareholders of the
Company (the "Selling Shareholders"). See "Principal and Selling Shareholders."
The Company will not receive any part of the proceeds from the sale of shares by
the Selling Shareholders. The Common Stock is traded on the Nasdaq National
Market under the symbol "NWPX." The last reported sale price for the Common
Stock on October 18, 1996 was $18.00 per share. See "Price Range of Common
Stock."
    
 
             THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
                     OF RISK. SEE "RISK FACTORS" AT PAGE 8.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
  EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
     SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
       PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
        REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
================================================================================================= 
                                                                                  PROCEEDS TO
                            PRICE TO        UNDERWRITING      PROCEEDS TO           SELLING
                             PUBLIC         DISCOUNT(1)        COMPANY(2)        SHAREHOLDERS
- -------------------------------------------------------------------------------------------------
<S>                         <C>             <C>               <C>                <C>
 Per Share............         $                 $                 $                   $
- -------------------------------------------------------------------------------------------------
 Total(3).............         $                 $                 $                   $
=================================================================================================
</TABLE>
 
(1) The Company and the Selling Shareholders have agreed to indemnify the
    Underwriters against certain liabilities, including liabilities under the
    Securities Act of 1933, as amended. See "Underwriting."
 
(2) Before deducting expenses payable by the Company estimated at $400,000.
 
(3) The Company and one of the Selling Shareholders have granted to the
    Underwriters an option, exercisable within 30 days of the date hereof, to
    purchase up to an aggregate of 360,000 additional shares of Common Stock
    solely to cover over-allotments, if any. If such option is exercised in
    full, the total Price to Public, Underwriting Discount, Proceeds to Company
    and Proceeds to Selling Shareholders will be $          , $          ,
    $          and $          , respectively. See "Underwriting."
 
     The shares of Common Stock are offered by the several Underwriters, subject
to receipt and acceptance of such shares by them. The Underwriters reserve the
right to reject any order in whole or in part. It is expected that the shares
will be ready for delivery in New York, New York on or about                ,
1996.
 
HANIFEN, IMHOFF INC.
                                  STEPHENS INC.
                                                           JENSEN SECURITIES CO.
 
                                           , 1996
<PAGE>   3
 
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, ON THE NASDAQ NATIONAL MARKET MAY BE
DISCONTINUED AT ANY TIME.
 
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY ENGAGE IN PASSIVE
MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF THE COMPANY ON THE NASDAQ
NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT
OF 1934. SEE "UNDERWRITING."
 
                                        2
<PAGE>   4
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto appearing elsewhere
in this Prospectus. Except as otherwise noted herein, all information in this
Prospectus assumes that the Underwriters' over-allotment option is not
exercised. Well-Life and Flame-Out are trademarks of the Company. Unless
otherwise indicated, all references in this Prospectus to the Company are to
Northwest Pipe Company and its subsidiaries, collectively. The principal
executive offices of the Company are located at 12005 N. Burgard, Portland,
Oregon 97283, and the Company's telephone number is (503) 285-1400.
 
                                  THE COMPANY
 
     Northwest Pipe Company manufactures and markets welded steel pipe in two
business segments. In its water transmission business segment, the Company is a
leading supplier in the United States and Canada of large diameter, high
pressure steel pipe used primarily for water transmission (the "Water
Transmission" business). In its tubular products business segment, the Company
manufactures smaller diameter, electric resistance welded ("ERW") steel pipe for
use in a wide range of construction, agricultural and industrial applications
(the "Tubular Products" business). In 1995, Water Transmission and Tubular
Products revenues represented approximately 63% and 37% of the Company's net
sales, respectively. Headquartered in Portland, Oregon, the Company operates
four manufacturing facilities. Water Transmission products are manufactured in
Portland, Oregon, Denver, Colorado and Adelanto, California (near Los Angeles),
and Tubular Products are manufactured in Portland, Oregon and Atchison, Kansas.
 
   
     From 1990 through 1995, the Company's annual net sales increased from $34.5
million to $97.7 million, while annual operating income increased from $1.0
million to $11.8 million. For the nine months ended September 30, 1996, net
sales increased 42.4% to $102.4 million from $71.9 million for the same period
in 1995, and operating income increased 82.6% to $15.0 million from $8.2 million
for the same period in 1995.
    
 
WATER TRANSMISSION
 
     Demand for water transmission products is driven primarily by projected
population growth and movement, establishment of new water sources and
replacement of aging waterworks infrastructure. The construction of new or
expanded water systems is critical to attracting and supporting both population
and economic growth. In addition, many existing water infrastructure systems
must be repaired or replaced to satisfy current and expanding water needs. The
Company believes it is strategically positioned to capitalize on growing water
infrastructure requirements. With facilities located in Portland, Oregon and
Adelanto, California, the Company has historically served the western United
States and southwestern Canada. The recent acquisition of Thompson Pipe and
Steel Company ("Thompson Pipe and Steel"), located in Denver, Colorado, has
expanded the Company's effective market reach throughout the midwest and central
United States. The Company is now a major supplier of large diameter, high
pressure steel pipe in the United States and is actively seeking other
opportunities to expand its presence in both domestic and international water
infrastructure markets.
 
     The Company has identified several factors that contribute to the success
of its Water Transmission business segment:
 
   
     - Active Markets. Demand for the Company's Water Transmission products
       continues to be strong as public agencies within the Company's market
       areas address their water transmission requirements. At September 30,
       1996, the Company had identified more than 500 projects within its market
       areas scheduled to be bid through 1999. The Company estimates these
       projects include water transmission pipe with a value of approximately
       $2.0 billion. No assurance can be given that these projects will be let
       for bid, awarded to the Company or built as scheduled.
    
 
     - Key Locations and Manufacturing Capabilities. The Company's strategically
       located manufacturing facilities enable the Company to address the demand
       for steel water transmission pipe in most of the United States and
       Canada. The Company's manufacturing capabilities allow it to meet a broad
       range
 
                                        3
<PAGE>   5
 
       of contract specifications including different pipe diameters and
       thicknesses, various coating and lining materials, and a variety of
       specialty fabrications.
 
     - Substantial Share of Projects Bid. The dollar value of projects awarded
       to the Company as a percentage of the value of projects bid by the
       Company has increased as illustrated below:
 
   
<TABLE>
<CAPTION>
                                      PERIOD                            PERCENTAGE
            ----------------------------------------------------------  ----------
            <S>                                                         <C>
            1993......................................................     27.7%
            1994......................................................     30.3%
            1995......................................................     35.0%
            Nine Months Ended September 30, 1996......................     35.0%
</TABLE>
    
 
   
       Management believes this increase is the result of the Company's emphasis
       on marketing activities, its focus on developing strong relationships
       with contractors, public works agencies and engineering firms and its
       increased experience in the southern California market. The rate for the
       first nine months of 1996 is not necessarily indicative of the rate that
       will be obtained for the full twelve months of 1996. In general, the
       Company does not expect substantial further improvement of its market
       share in its historical market areas. However, the Company believes its
       recent acquisition of Thompson Pipe and Steel provides opportunities to
       increase the Company's penetration of market areas east of the Rocky
       Mountains.
    
 
TUBULAR PRODUCTS
 
     The Company's Tubular Products range in size from 4" to 16" in diameter and
are marketed through a network of direct sales force personnel and independent
distributors in the United States and Canada. The Company has historically
focused on niche markets that typically generate strong margins due to limited
competition. The tubular products industry, however, serves very large markets
with products that generally have wall thicknesses greater than those that the
Company has traditionally manufactured. The Company is currently expanding its
business into these higher volume segments of the tubular products industry by
building on its key strengths of location, established distribution channels and
manufacturing expertise.
 
     The Company has identified several factors that contribute to the success
of its Tubular Products business segment:
 
     - Well Positioned in Niche Markets. The Company has historically
       manufactured and continues to produce pipe products with light wall
       thicknesses in relation to diameters. These products are sold in niche
       markets with limited competition and typically generate high margins. The
       Company believes it is well positioned to maintain its competitive
       position.
 
     - Expanding Product Lines. The Company has adopted a strategy of expanding
       its product lines to better utilize the available capacity in each of its
       facilities. While the Company's new products generally produce lower
       margins than the Company's niche products, the increased volume
       contributes to the Company's profitability.
 
     - Diversified Demand. The Tubular Products business segment benefits from a
       customer base that extends across numerous industries. Demand for the
       Company's three primary Tubular Product groups are determined by
       different economic factors. The demand for products used in fire
       protection sprinkler systems is affected by non-residential construction
       activity, the demand for products used in irrigation and other
       agricultural applications is related to the farm economy and the demand
       for industrial products is determined by the overall economy. This
       diversification helps mitigate the Company's exposure to specific
       industry or general business cycles.
 
ACQUISITIONS AND EXPANSION
 
     The Company believes there are opportunities to acquire companies in
similar or related businesses and to expand its product lines. The Company
believes such acquisitions and expansions will enable it to leverage its
manufacturing, marketing and distribution capabilities. The Company's ability to
pursue acquisitions and to expand its product lines will be enhanced by the
reduction in debt and increased debt capacity resulting from this offering.
Consistent with this strategy, the Company recently acquired Thompson Pipe and
Steel and
 
                                        4
<PAGE>   6
 
   
recently acquired and plans to install a new Tubular Products production line in
its Portland, Oregon facility. In addition, the Company has from time to time
evaluated and continues to evaluate other opportunities for acquisition and
expansion and, consistent with this practice, the Company is currently engaged
in preliminary discussions with other parties regarding possible acquisitions.
    
 
     Acquisitions. On May 31, 1996, the Company acquired Thompson Pipe and
Steel, a manufacturer of steel water transmission pipe headquartered in Denver,
Colorado for approximately $5.2 million. The Company believes this acquisition
is a strong strategic fit that broadens its current geographic market for Water
Transmission pipe into the midwest and central United States. The acquisition
also provides additional manufacturing capacity that could be applied to
projects in the Company's western markets.
 
     Thompson Pipe and Steel has operated in Denver since 1878. In 1990,
Thompson Pipe and Steel added a manufacturing facility in Princeton, Kentucky.
This facility was unprofitable and was closed in August, 1995. At the time of
the closure of the Kentucky facility, Thompson Pipe and Steel had significant
outstanding customer delivery commitments on projects in process. The completion
of these projects out of its Denver facility caused continued and significant
losses resulting from high manufacturing costs, increased freight expenses, and
back charges related to late delivery and quality issues. As a result, Thompson
Pipe and Steel lost $8.3 million in 1995 and $6.6 million through May 31, 1996.
The Company's management does not believe that the closure of the Kentucky
facility will have any continuing material adverse impact on the Company's
future operations. Since acquiring Thompson Pipe and Steel, the Company has
replaced the senior management team with its own personnel. Additionally, the
Company has already eliminated several salaried positions, effectively reducing
compensation expenses by approximately $1.5 million per year.
 
   
     Thompson Pipe and Steel had net sales of $37.6 million in 1995,
approximately $25.3 million of which were attributable to the Denver facility.
The Company will continue to operate the Denver plant but intends to sell the
Kentucky facility.
    
 
     Product Line Expansion. The Company recently acquired and plans to install
a new Tubular Products production line in its Portland, Oregon facility. The
installed cost is expected to be approximately $10.0 million. See "Use of
Proceeds". This new line will enable the Company to compete in new markets by
making smaller diameter and heavier wall products than it has previously
manufactured. These products will be targeted for use in industrial piping, oil
and gas transmission, fire protection systems and other applications. While this
new production line will focus on what are traditionally viewed as "commodity"
products, the Company believes it will have significant competitive advantages
in serving customers in the northwestern United States, including the following:
 
     - Geographic niche. The Company has a competitive advantage in customer
       service capability and freight costs because there are no other
       manufacturers of these products in the northwestern United States.
 
     - Existing customer base. The Company expects that many of the products it
       intends to manufacture will be sold to current customers through existing
       distribution channels. Consequently, the Company believes that it can
       readily increase sales volume without significantly increasing selling
       costs.
 
     - Reduced cost of entry. The Company has acquired existing equipment as the
       cornerstone of this new production line. Additionally, installing this
       line in its Portland facility enables the Company to take advantage of
       its trained work force, manufacturing expertise and support equipment. As
       a result, the Company estimates it can be in production in approximately
       one-half the time and at less than one-half the cost compared to the time
       and cost required to design and construct a new facility.
 
     - New raw material source. The Company currently purchases steel coil from
       sources which are a substantial distance from its Portland facility.
       Consequently, in bound freight is a significant cost. Oregon Steel Mills
       is in the process of adding steel coil manufacturing capabilities to its
       facility located approximately one mile from the Company's Portland
       facility. If Oregon Steel Mills completes this capital expansion and can
       supply the Company with steel coil at a competitive price, the Company
       expects a sizeable reduction in its in-bound freight costs. No assurance
       can be given that Oregon Steel Mills will complete its expansion or be
       able to supply steel coil to the Company.
 
                                        5
<PAGE>   7
 
   
ENVIRONMENTAL DEVELOPMENTS
    
 
   
     The Company has entered into an agreement in principle with the United
States Environmental Protection Agency and the Oregon Department of
Environmental Quality with respect to a proposed settlement of litigation
relating to the Company's potential liability for the costs of response actions
at a Superfund site in Clackamas, Oregon on which the Company operated prior to
its Chapter 11 bankruptcy in 1986. See "Risk Factors -- Superfund Site" and
"Business -- Environmental Matters."
    
 
                                  THE OFFERING
 
<TABLE>
<S>                                                    <C>
Common Stock offered by the Company..................  1,200,000 shares
Common Stock offered by the Selling Shareholders.....  1,200,000 shares
Common Stock to be outstanding after the offering....  6,494,889 shares(1)
Use of Proceeds......................................  To finance the acquisition and installation
                                                       of a Tubular Products production line in the
                                                       Company's Portland, Oregon facility, to
                                                       repay certain indebtedness and for general
                                                       corporate purposes. See "Use of Proceeds."
Nasdaq National Market System symbol.................  NWPX
</TABLE>
 
- ---------------
   
(1) Does not include 301,309 shares of Common Stock issuable upon the exercise
    of stock options outstanding as of September 30, 1996, of which options to
    purchase 199,077 shares were exercisable on that date.
    
 
                                        6
<PAGE>   8
 
                         SUMMARY FINANCIAL INFORMATION
 
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
   
<TABLE>
<CAPTION>
                                                                                               NINE MONTHS ENDED
                                                     YEAR ENDED DECEMBER 31,                     SEPTEMBER 30,
                                       ---------------------------------------------------    -------------------
                                        1991       1992       1993       1994       1995       1995        1996
                                       -------    -------    -------    -------    -------    -------    --------
                                                                                                  (UNAUDITED)
<S>                                    <C>        <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Net sales.........................   $62,098    $65,967    $54,437    $73,641    $97,715    $71,927    $102,449
  Gross profit......................     7,338      9,936      6,529     11,980     19,576     13,644      23,235
  Operating income..................     3,311      5,141      1,160      6,261     11,778      8,217      15,006
  Income (loss) before income
    taxes...........................       680      2,716       (907)     3,453      8,330      5,591      13,409
  Net income(1).....................       408      1,662        263      2,161      5,107      3,492       8,046
  Net income per share..............                                               $  1.43    $  1.03    $   1.45
  Weighted average shares used in
    net income per share............                                                 3,695      3,551       5,537
SUPPLEMENTAL PER SHARE DATA:
  Supplemental net income per
    share(2)........................                                               $  1.03    $  0.72    $   1.25
  Weighted average shares used in
    supplemental net income per
    share(2)........................                                                 6,689      6,616       6,727
OTHER DATA:
  Depreciation and amortization.....   $ 1,663    $ 1,620    $ 1,170    $ 1,302    $ 1,362    $   982    $  1,372
  Capital expenditures..............     2,592      1,196      4,217      1,667      2,556      1,591       3,410
  Backlog(3)........................    30,106     17,266     13,027     45,698     41,689     44,009      45,913
  Gross profit percentage...........     11.8%      15.1%      12.0%      16.3%      20.0%      19.0%       22.7%
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                                                                          SEPTEMBER 30, 1996
                                                                      --------------------------
                                                                                         AS
                                                                       ACTUAL        ADJUSTED(4)
                                                                      --------       -----------
<S>                                                                   <C>            <C>
BALANCE SHEET DATA:
  Working capital...................................................  $ 22,463        $  35,398
  Total assets......................................................   102,328          112,328
  Short-term debt (including current portion of long-term
     obligations)...................................................    27,760           24,825
  Long-term obligations, less current portion(5)....................    14,536            7,513
  Stockholders' equity..............................................    41,812           61,770
</TABLE>
    
 
- ---------------
(1) Net income for the year ended December 31, 1993 includes a $837,000 benefit
    reflecting the cumulative effect of a change in method of accounting for
    income taxes. See Note 14 of Notes to the Consolidated Financial Statements
    of the Company.
 
   
(2) Supplemental net income per share and weighted average shares outstanding
    give effect as of the beginning of each period presented to (i) the
    Company's initial public offering in November, 1995, and (ii) the sale of
    1,200,000 shares of Common Stock offered by the Company hereby and the
    application of the net proceeds therefrom at an assumed public offering
    price of $18.00 per share.
    
 
(3) Figures given are as of the last day of the period indicated. The Company
    includes confirmed orders in backlog, including the balance of projects in
    process. The Company also includes projects for which the Company has been
    notified it is the successful bidder even though a binding agreement has not
    been executed. Projects for which a binding contract has not been executed
    could be canceled. Binding orders received by the Company may also be
    subject to cancellation or postponement, however cancellation would
    generally obligate the customer to pay the costs incurred by the Company.
    Backlog orders as of any particular date may not be indicative of actual
    operating results for any fiscal period. There can be no assurance that any
    amount of backlog ultimately will be realized.
 
   
(4) Adjusted to give effect to the sale of 1,200,000 shares of Common Stock
    offered by the Company hereby at an assumed public offering price of $18.00
    per share and the application of the net proceeds therefrom. See "Use of
    Proceeds" and "Capitalization."
    
 
(5) Includes capital lease obligations, note payable to financial institution
    and long-term debt.
 
                                        7
<PAGE>   9
 
                                  RISK FACTORS
 
     An investment in the Common Stock offered hereby involves a high degree of
risk. The following are among the factors that prospective investors should
consider carefully in evaluating the Company and its business before purchasing
the shares of Common Stock offered by this Prospectus. This Prospectus contains
certain information and trend statements that constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, which involve risks and uncertainties. Actual results may differ
materially from the results described in the forward looking statements. When
used in this document, the words "anticipate," "believe," "estimate," "expect,"
"intend" and other similar expressions, as they relate to the Company, are
intended to identify forward looking statements. Such statements reflect the
current views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions that include, but are not limited
to, those discussed in the Prospectus Summary, Risk Factors and Management's
Discussion and Analysis of Financial Condition and Results of Operations.
 
     RELIANCE ON PUBLIC WATER TRANSMISSION PROJECTS; NATURE OF DEMAND.  A
substantial portion of the Company's Water Transmission revenue is derived from
sales to installation contractors for public water transmission projects. As
such, the Company's sales could be adversely impacted by declines in the number
of projects planned by public water agencies, governmental spending cuts,
general budgetary constraints or the inability of governmental entities to issue
debt. No assurance can be given that the number of public water transmission
projects will not decline. A decline in the number of such projects or in the
funding available for such projects could have a material adverse effect on the
Company's business, financial condition and results of operations.
 
     PROJECT DELAYS.  Because projects in the Company's Water Transmission
business are generally announced by the public water agencies constructing such
projects well in advance of the bidding and construction process, it is not
unusual for projects to be delayed or rescheduled. Projects have been
rescheduled in the past for a number of reasons, including changes in public
water agencies' construction priorities, difficulties in complying with
environmental and other governmental regulations, additional time required to
acquire rights-of-way or property rights and failure to obtain adequate public
funding. No assurance can be given that projects on which the Company intends to
bid will not be rescheduled. Substantial delays with respect to major projects
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
 
     SUPERFUND SITE.  The United States Environmental Protection Agency (the
"EPA") sent a Special Notice Letter for Remedial Investigation/Feasibility Study
dated June 8, 1995 (the "Special Notice") to the Company notifying the Company
that it, along with three other parties, may be a Potentially Responsible Party
("PRP") with respect to a site in Clackamas, Oregon that was added to the EPA's
National Priorities List ("NPL") on October 14, 1992 (the "Site"). The Company
conducted manufacturing operations on a portion of the Site prior to its Chapter
11 Bankruptcy in 1986. The Company has not owned, leased or operated at the Site
since the confirmation of the Company's Plan of Reorganization (the "Plan") on
December 11, 1986. Under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA" or "Superfund"), PRPs may be
ordered to perform response actions with respect to the Site including, but not
limited to, conducting a Remedial Investigation/Feasibility Study, conducting a
Remedial Design/Remedial Action, and other investigation, planning and
remediation activities (collectively, the "Response Activities"), or to
reimburse the government for certain costs associated with Response Activities
it performs.
 
     The Company has advised the EPA of its position that any claims against the
Company with respect to liability for Response Activities at the Site that could
have been brought by the EPA were discharged by the United States Bankruptcy
Court's confirmation of the Plan. The Bankruptcy Court has granted a motion by
the Company seeking to reopen its bankruptcy proceedings. The Company has filed
a complaint seeking a declaratory judgment from the Bankruptcy Court that all
environmental claims related to the Company's operations prior to the completion
of its bankruptcy reorganization were discharged by the Bankruptcy Court's
confirmation of the Plan. On November 13, 1995, both the EPA and the Oregon
Department of Environmen-
 
                                        8
<PAGE>   10
 
   
tal Quality (the "DEQ") filed answers to the Company's motion for declaratory
judgment. Both the EPA and the DEQ (the "Agencies") asserted defenses against
the Company's claim including assertions that the Company did not provide
appropriate notice of its bankruptcy proceeding, that the bankruptcy proceeding
cannot discharge an injunctive order for ongoing pollution and that the
environmental claims are not dischargeable because they are post-confirmation
claims. In addition to asking the court to allow its environmental claims
against the Company, the EPA also asked for a declaration requiring the Company
to amend its schedule of liabilities pursuant to the bankruptcy or permit the
EPA to file a late proof of claim. The Company, the EPA and the DEQ have
substantially completed discovery in this matter.
    
 
   
     In August 1996, the Bankruptcy Court ordered a temporary suspension in the
litigation to provide the parties the opportunity to pursue settlement options.
In September 1996, the Company entered into mediation with the Agencies in an
attempt to resolve the matter without incurring the substantial additional
expense of continuing the litigation. As a result of the mediation process, the
Company and the Agencies entered into an agreement in principle with respect to
a proposed settlement of the litigation (the "Settlement Agreement"). Under the
terms of the Settlement Agreement, the Company would pay the Agencies $1.0
million, and deposit an additional $2.3 million in an escrow account or trust
(the "Trust"), with the interest income on the Trust to be distributed to the
Agencies. A condition of the Settlement Agreement is that title to the portion
of the Site that is currently vacant (the "Property") be transferred to the
Agencies.
    
 
   
     The Settlement Agreement provides that the Agencies would complete
construction of the remedial action at the Property in accordance with their
standards and would have the right to sell the Property at any time during the
clean-up process. If the Property is sold by the Agencies during the clean-up
process, the $2.3 million held in the Trust would be returned to the Company.
Once the Property has been remediated as evidenced by completion of construction
of the remedial action and issuance of Remedial Action Reports or their
equivalents and the Property is usable for a "reasonable commercial or
industrial use", the Agencies would have the option to continue to market the
Property for one year. If the Property is not sold during this period, the
Company could elect to have the Property conveyed to it in exchange for the $2.3
million held in the Trust. If the Company takes ownership of the Property and
sells it within one year thereafter, fifty percent of any net proceeds in excess
of $2.3 million would have to be paid to the Agencies. The Agencies would
provide a "Prospective Purchaser Agreement" which would specify that any
prospective purchaser of the Property would not be liable for any past
environmental contamination or any ongoing remediation resulting from past
operations at the Site. If the Company elects not to take ownership of the
Property, the Agencies would retain the $2.3 million held in the Trust. If the
Agencies are unable to complete construction of the remedial action and clean up
soils so that the Property can be used for a reasonable commercial or industrial
use within ten years, they would be required to return the $2.3 million held in
the Trust to the Company.
    
 
   
     The Company and the Agencies have agreed to embody the terms of the
Settlement Agreement in a Consent Decree patterned after the EPA's National
Model for Consent Decrees. The Consent Decree would also contain covenants not
to sue, reservations of rights, and protection for the Company from claims for
contribution for environmental cleanup costs for the Site.
    
 
   
     The Settlement Agreement is conditioned upon the transfer of title to the
Property to the Agencies. The Property is owned by at least one other PRP, which
has not yet executed an agreement to transfer title to the Property to the
Agencies. Furthermore, although the Settlement Agreement reflects the material
terms of the proposed settlement agreed to by the Company and the Agencies, the
Settlement Agreement does not represent a final settlement of the litigation. A
final binding settlement of the litigation will be effected only through the
Bankruptcy Court's entry of a Consent Decree for the Site, which must be
prepared and agreed upon, and which is subject to public comment and the
approval of the United States Department of Justice, the EPA, the State of
Oregon and the Company's Board of Directors. No assurance can be given that the
Company and the Agencies will be able to reach agreement on a mutually
acceptable Consent Decree, that the terms of any such Consent Decree will be
substantially the same as those set forth in the Settlement Agreement or that
any such Consent Decree will be approved by all required parties.
    
 
   
     In the event that the Company and the Agencies are not able to achieve a
settlement and the bankruptcy defense is unsuccessful, the Company's ultimate
liability will depend on the total costs of the Response
    
 
                                        9
<PAGE>   11
 
   
Activities and the related costs and fees of the allocation process, the PRPs'
relative contribution of contaminants at the Site and the final allocation of
costs to the Company which may ultimately result in litigation and take several
years to determine. Based upon a preliminary estimate of the types of
contaminants found and the number of years each PRP owned or operated on the
Site, the Company believes that, if a settlement is not achieved and its
bankruptcy defense is unsuccessful, its liability for the costs of Response
Activities and the costs and fees of the allocation process would range from
$4.0 million to $6.0 million on an undiscounted basis. This range is primarily
based on the length of time the Company operated at the site. This range also
assumes that the Company will not be held responsible for Response Activity
costs which are allocable to the other PRPs; however, there is no assurance that
the Company will not ultimately bear liability with respect to such costs
disproportionate to the duration of the Company's operations at the site. If the
Company is ultimately found to have liability to the EPA or the DEQ with respect
to the Site, no assurance can be given that such liability would not have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Environmental Matters."
    
 
     FLUCTUATIONS IN QUARTERLY RESULTS; CYCLICALITY.  The Company's net sales
and net income may fluctuate significantly from quarter to quarter due to the
size of certain Water Transmission orders, the schedule for deliveries of those
orders and the inventory management policies of certain of the Company's Tubular
Products customers. The Company has experienced such fluctuations in the past
and may experience such fluctuations in the future. Results of operations in any
period should not be considered indicative of the results to be expected for any
future period, and fluctuations in operating results may also result in
fluctuations in the price of the Common Stock. No assurance can be given that
the Company will remain profitable in any future period. The Company's business
is subject to cyclical fluctuations based on general economic conditions and the
economic conditions of the specific industries served. Future economic downturns
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
 
     ENVIRONMENTAL AND REGULATORY CONCERNS.  The Company is subject to numerous
federal, state and local laws and regulations that govern the discharge and
disposal of wastes, discharges or emissions of certain materials into the
environment, workplace safety, equal employment opportunities and other aspects
of the Company's business. The Company's operations entail the risk of future
noncompliance with environmental and other government regulations. Environmental
and other legislation and regulations have changed rapidly in recent years and
it is likely that the Company will be subject to even more stringent
environmental standards in the future. It is not possible to predict the total
amount of all capital expenditures or the amount of any increases in operating
costs or other expenses, that may be incurred by the Company to comply with the
environmental and other requirements applicable to the Company and its
operations, or whether all such cost increases can be passed on to customers
through price increases. Moreover, environmental legislation has been enacted,
and may in the future be enacted, which creates liability for past actions that
were lawful at the time taken. Such legislation may create public rights of
action for environmental conditions and activities. As in the case with
manufacturing companies in general, if damage to persons or the environment has
been caused, or is in the future caused, by the Company's hazardous materials
activities or by hazardous substances now or hereafter located at the Company's
facilities, the Company may be fined and/or held liable for the cost of
remediating such damage. In addition, the Company may be required to remedy such
conditions or change its procedures which may increase operating costs. See
"Business -- Environmental Matters."
 
     INTEGRATION OF THOMPSON PIPE AND STEEL.  The Company recently acquired
Thompson Pipe and Steel. In connection with such acquisition, the activities and
employees of Thompson Pipe and Steel must be integrated into the Company's
operations. There can be no assurance that such integration will be smooth or
ultimately successful. In addition, there can be no assurance that such
integration can be accomplished without incurring substantial additional costs
or diverting management's attention and resources. If the integration of
Thompson Pipe and Steel into the Company's operations is unsuccessful, it could
have a material adverse effect on the Company's business, financial condition
and results of operations. In addition, prior to its acquisition by the Company,
Thompson Pipe and Steel had net losses of $8.3 million and $6.6 million in the
year ended December 31, 1995 and the five months ended May 31, 1996,
respectively. While the Company believes these losses were attributable to the
operations at, and costs associated with the closure of,
 
                                       10
<PAGE>   12
 
the Kentucky facility, no assurance can be given that Thompson Pipe and Steel
will not have losses in future periods or that if such losses occur, they will
not have a material adverse effect on the Company's business, financial
condition and results of operations. See "Consolidated Financial Statements of
Thompson Pipe and Steel Company" and "Pro Forma Combined Financial Statements."
 
     COMPETITION.  Competition in the Company's business segments is
significant. There are many competitors in the Tubular Products business segment
and price is often a prime consideration for purchase of the Company's products.
Orders in the Water Transmission business are competitively bid and price
competition is vigorous. Price competition may reduce the gross margin on sales,
which may adversely affect overall profitability. Many of the Company's
competitors have substantially greater financial, technical and marketing
resources than the Company. No assurance can be given that the Company will be
able to compete successfully against its current competitors or that existing or
new competitors will not expand or establish new facilities within the Company's
market areas. New or expanded facilities of competitors could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business -- Competition."
 
     FLUCTUATIONS IN STEEL PRICES.  Purchased steel represents a substantial
portion of the Company's cost of sales. The steel industry is highly cyclical in
nature and steel prices are influenced by numerous factors beyond the control of
the Company, including general economic conditions, import duties, other trade
restrictions and currency exchange rates. Historically, the Company has sought
to recover increases in steel prices through price increases of its products.
There can be no assurance that steel prices will not increase or that the
Company will be successful in implementing related price increases on its
products. Any increase in steel prices which is not offset by increases in the
Company's prices could have a material adverse effect on the Company's business,
financial condition and results of operations.
 
     UNCERTAINTY OF FUTURE ACQUISITIONS.  A key element of the Company's
strategy is to evaluate opportunities to acquire businesses or assets in pipe
manufacturing or related industries. The success of this strategy depends not
only upon the Company's ability to identify and acquire businesses on a
cost-effective basis, but also upon its ability to effectively integrate
acquired operations into its organization. Additionally, the Company experiences
competition for acquisitions. There can be no assurance that the Company will be
able to successfully negotiate and consummate such acquisitions or that such
acquisitions, if completed, will be successfully integrated into the Company's
operations.
 
     PRODUCTION LINE START-UP.  The Company recently acquired and plans to
install a new Tubular Products production line in its Portland, Oregon facility.
The Company intends to use approximately $10 million of the net proceeds of this
offering to finance such acquisition and installation. This new production line
is scheduled to be operational by mid-1997. The Company may experience start-up
difficulties, such as cost overruns, operational difficulties and significant
delays. Any such problems encountered by the Company could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Use of Proceeds."
 
     DEPENDENCE ON KEY PERSONNEL.  The Company is dependent upon the continued
services of its Chief Executive Officer, William R. Tagmyer, its Chief Financial
Officer, Brian W. Dunham, and upon the services of certain other key management
personnel. The Company does not have employment or non-competition agreements
with any of its key employees. The loss of key personnel could have a material
adverse effect on the Company. The Company's success will depend on its ability
to retain key employees and to attract and retain a skilled work force. There
can be no assurance that the Company will be successful in attracting and
retaining the personnel it requires to develop, manufacture and market its
products or expand its operations. The Company carries "key man" life insurance
in the amount of $1 million covering Mr. Tagmyer. See "Management."
 
     DEPENDENCE ON SUPPLIERS.  The Company's products require the supply of raw
materials consisting primarily of steel coil, various coating materials and
numerous specialty components. The Company has at least two suppliers for most
of its raw materials. There can be no assurance, however, that the Company will
not experience shortages of raw materials or components essential to its
production processes or be forced to seek alternative sources of supply. Any
shortages of raw materials may result in production delays and costs
 
                                       11
<PAGE>   13
 
which could have a material adverse affect on the Company's business, financial
condition and results of operations. See "Business -- Suppliers."
 
     PRODUCT LIABILITY.  The manufacturing and use of steel pipe involves a
variety of risks. Certain losses may result or be alleged to result from defects
in the Company's products, thereby subjecting the Company to claims for damages,
including consequential damages. The Company warrants its products to be free of
certain defects. The Company maintains insurance coverage against potential
product liability claims in the amount of $27 million which it believes to be
adequate. However, there can be no assurance that product liability claims
exceeding the Company's insurance coverage will not be experienced in the future
or that the Company will be able to maintain such insurance with adequate
coverage levels.
 
     COMPETITION FROM IMPORTS.  The domestic tubular products market is affected
by the level of imports of tubular products, which has varied significantly over
time. High levels of imports may reduce the volume sold by domestic producers
and depress selling prices of tubular products. The Company believes that import
levels are affected by, among other things, overall worldwide demand for tubular
products, the trade practices of and government subsidies to foreign producers
and the presence and absence of governmentally imposed trade restrictions in the
United States. Increased imports of tubular products in the United States and
Canada could have a material adverse effect on the Company's business, financial
condition and results of operations.
 
   
     COLLECTIVE BARGAINING AGREEMENTS.  All of the Company's 94 hourly employees
at its Denver, Colorado facility are represented by a union under a collective
bargaining agreement which expires January 15, 1998. No assurance can be given
that there will not be strikes or other work stoppages by the Company's union
employees or that labor negotiations that occur in connection with the Company's
current collective bargaining agreement will result in a new agreement
containing terms favorable to the Company. The failure to negotiate a
satisfactory renewal of the current collective bargaining agreement upon the
expiration thereof or the occurrence of a strike or other work stoppage at the
Company's Denver facility could have a material adverse effect on the Company's
business, financial condition and results of operations.
    
 
   
     CONCENTRATION OF OWNERSHIP.  Upon completion of this offering, the
principal shareholder of the Company, Interven II, L.P., will beneficially own
approximately 13.7% of the outstanding Common Stock. Interven may be able to
significantly influence the direction and policies of the Company, the election
of the Company's Board of Directors and the outcome of any other matters
requiring shareholder approval, including any merger, consolidation, sale of all
or substantially all of the assets of the Company or a change in control of the
Company. See "Principal and Selling Shareholders."
    
 
     POSSIBLE VOLATILITY OF STOCK PRICE.  The Common Stock has experienced price
volatility and such volatility may occur in the future, particularly as a result
of announcements of developments related to the Company's business, general
market conditions, quarterly variations in operating results, changes in
earnings estimates by analysts, general conditions in the economy and other
events or factors. In addition, in recent years the stock market in general, and
the market for shares of small capitalization stocks in particular, have
experienced extreme price fluctuations, which have often been unrelated to the
operating performance of affected companies. Such factors could adversely affect
the market price of the Common Stock. There can be no assurance that the public
offering price will correspond to the price at which the Common Stock will trade
in the public market subsequent to this offering. See "Price Range of Common
Stock" and "Underwriters."
 
   
     DILUTION.  Investors participating in this offering will incur immediate
and substantial dilution in the net tangible book value of their shares of
Common Stock in the amount of $8.49 per share (assuming the shares offered
hereby are sold at a price of $18.00 per share and after deducting the estimated
underwriting discount and estimated offering expenses payable by the Company).
Additional dilution will occur upon the exercise of outstanding stock options.
    
 
     SHARES ELIGIBLE FOR FUTURE SALE.  Sales of a substantial number of shares
of the Common Stock in the public market following this offering could adversely
affect the market price for the Common Stock. Upon completion of this offering,
the Company will have a total of 6,494,889 shares of Common Stock outstanding.
The Company and its officers and directors and certain stockholders have
executed agreements pursuant to which each has agreed not to, directly or
indirectly, offer, sell, offer to sell, contract to sell, grant any option to
 
                                       12
<PAGE>   14
 
purchase or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, grant of any option to purchase or other sale or
disposition) of shares of Common Stock or any securities convertible into or
exercisable therefor, for a period of 90 days from the date of this Prospectus
without the prior written consent of Hanifen, Imhoff Inc., on behalf of the
Underwriters. Approximately 1,382,815 of the shares outstanding upon completion
of this offering (1,214,107 shares if the over-allotment option is exercised in
full) will be subject to the resale restrictions imposed by these agreements and
thereafter will be eligible for resale pursuant to Rule 144 under the Securities
Act of 1933, as amended (the "Act"). Following completion of this offering,
certain shareholders of the Company will have certain demand and piggyback
registration rights with respect to approximately 1,300,000 shares of the
Company's Common Stock. See "Description of Capital Stock," "Shares Eligible for
Future Sale" and "Underwriting."
 
     ANTI-TAKEOVER PROVISIONS.  Certain provisions of the Company's Articles of
Incorporation and Bylaws and the Oregon Business Corporation Act will have the
effect of making it more difficult for a third-party to acquire, or discouraging
a third-party from attempting to acquire, control of the Company through either
a tender offer or a proxy contest for the election of directors. The Company's
Articles of Incorporation and Bylaws contain provisions which (i) classify the
Board of Directors into three classes as nearly equal in number as possible,
each of which, after an interim arrangement, will serve for three years with one
class being elected each year (the "Classified Board Provisions"), (ii) provide
that directors may be removed by stockholders only for cause and only upon the
vote of 75% of the votes then entitled to be cast for the election of directors,
(iii) require the approval of holders of 67% of the outstanding shares of the
Company entitled to vote to effect a merger or consolidation of the Company, the
sale, lease or exchange of all or substantially all of the assets of the Company
or the liquidation or dissolution of the Company and (iv) permit the Board of
Directors to issue Preferred Stock in one or more series and to fix the number
of shares constituting any such series, the voting powers and all other rights
and preferences of any such series, without any further vote or action by the
stockholders of the Company. These provisions may have the effect of lengthening
the time required for a person to acquire control of the Company through a proxy
contest or the election of a majority of the Board of Directors and may deter
any potential unfriendly offers or other efforts to obtain control of the
Company. This could deprive the Company's shareholders of opportunities to
realize a premium for their Common Stock and could make removal of incumbent
directors more difficult. See "Description of Capital Stock" and "Management."
 
                                       13
<PAGE>   15
 
                                USE OF PROCEEDS
 
   
     The net proceeds to the Company from this offering are estimated to be
$20.0 million ($23.2 million if the Underwriters' over-allotment option is
exercised in full), based on an assumed public offering price of $18.00 per
share and after deducting the estimated underwriting discount and estimated
offering expenses payable by the Company. The Company intends to use
approximately $10.0 million of the net proceeds to finance the acquisition and
installation of a Tubular Products production line in the Company's Portland,
Oregon facility. The balance of the net proceeds from this offering will be used
(i) to repay outstanding indebtedness under the Company's line of credit (the
"Line of Credit") incurred to finance the Company's working capital, capital
expenditures and the acquisition of Thompson Pipe and Steel and (ii) for general
corporate purposes. The Line of Credit currently bears interest at a rate of
8.25% and the amounts currently outstanding under the line of credit are due
September 2001. Pending the application of the net proceeds as described above,
the net proceeds from this offering will be invested in short-term
interest-bearing, investment grade securities. The Company will not receive any
part of the proceeds from the sale of shares by the Selling Shareholders.
    
 
     The repayment of currently outstanding indebtedness will generate
additional borrowing capacity which may be used by the Company to pursue
strategic acquisitions that complement the Company's current business or to make
additional investments in expanding the Company's product lines. See
"Business -- Strategy." The Company has from time to time evaluated and
continues to evaluate opportunities for acquisitions and expansion and,
consistent with this practice, is currently engaged in preliminary discussions
with other parties regarding possible acquisitions.
 
                                DIVIDEND POLICY
 
     The Company has not declared or paid dividends since emerging from
bankruptcy in 1986. The terms of the Line of Credit prohibit the payment of
dividends. The Company does not anticipate paying any cash dividends or making
any other distributions on the Common Stock in the foreseeable future. It is
expected that the policy of the Company's Board of Directors will be to reinvest
any earnings to finance the expansion of the Company's business.
 
                          PRICE RANGE OF COMMON STOCK
 
     The Common Stock is traded on the Nasdaq National Market under the symbol
"NWPX." The Company completed its initial public offering of Common Stock on
November 30, 1995, at a price of $9.00 per share. The following table sets
forth, for the periods indicated, the high and low bid prices for the Common
Stock as reported on the Nasdaq National Market.
 
   
<TABLE>
<CAPTION>
                                                                     HIGH      LOW
                                                                     -----    -----
          <S>                                                        <C>      <C>
          Year Ended December 31, 1995
            Fourth Quarter (from November 30, 1995)................  $10 3/4  $ 9 1/2
          Year Ending December 31, 1996
            First Quarter..........................................   13 1/2    9 7/8
            Second Quarter.........................................   18 1/8   12 3/4
            Third Quarter..........................................   20 1/2   15 3/4
            Fourth Quarter (through October 18, 1996)..............   19 3/4   17 1/2
</TABLE>
    
 
   
     On October 18, 1996, the last reported sale price for the Common Stock was
$18.00 per share. As of September 30, 1996 there were approximately 1,100
beneficial holders of the Common Stock.
    
 
                                       14
<PAGE>   16
 
                                 CAPITALIZATION
 
   
     The following table sets forth, as of September 30, 1996, (i) the
short-term debt and actual capitalization of the Company, and (ii) the
short-term debt and capitalization of the Company as adjusted to give effect to
the sale by the Company of 1,200,000 shares of Common Stock in this offering at
an assumed public offering price of $18.00 per share and the application of the
net proceeds therefrom. See "Use of Proceeds." This table should be read in
conjunction with the Company's Consolidated Financial Statements and Notes
thereto included elsewhere in this Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                            SEPTEMBER 30, 1996
                                                                           ---------------------
                                                                           ACTUAL    AS ADJUSTED
                                                                           -------   -----------
                                                                              (IN THOUSANDS)
<S>                                                                        <C>       <C>
Short-term debt (includes current portion of long-term obligations)......  $27,760     $24,825
                                                                           =======     =======
Long-term obligations (net of current portion)...........................  $14,536     $ 7,513
Stockholders' equity(1):
  Preferred Stock, $.01 par value, 10,000,000 shares authorized, none
     issued and outstanding..............................................
  Common Stock, $.01 par value, 15,000,000 authorized, 5,294,889 issued
     and outstanding actual; 6,494,889 issued and outstanding as
     adjusted............................................................       53          65
Additional paid-in capital...............................................   22,940      42,886
Retained earnings after December 31, 1986 reorganization.................   18,819      18,819
                                                                           -------     -------
  Total stockholders' equity.............................................   41,812      61,770
                                                                           -------     -------
          Total capitalization...........................................  $56,348     $69,283
                                                                           =======     =======
</TABLE>
    
 
- ---------------
   
(1) Excludes 301,309 shares of Common Stock issuable upon the exercise of stock
    options outstanding as of September 30, 1996, of which options to purchase
    199,077 shares were exercisable on that date. See Note 11 of Notes to the
    Company's Consolidated Financial Statements.
    
 
                                       15
<PAGE>   17
 
                            SELECTED FINANCIAL DATA
 
   
     The selected financial data set forth below for the years ended December
31, 1993, 1994 and 1995 and the balance sheet data at December 31, 1994 and 1995
are derived from, and are qualified by reference to, the Company's Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus
which have been audited by Coopers & Lybrand L.L.P., independent accountants.
The selected financial data for the years ended December 31, 1991 and 1992 and
the balance sheet data at December 31, 1991, 1992 and 1993 are derived from
audited financial statements not included in this Prospectus. The selected
financial data at September 30, 1995 and 1996 and for the nine month periods
ended September 30, 1995 and 1996 are derived from unaudited interim financial
statements of the Company. In the opinion of management, such financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the Company's results of
operations for such periods. Operating results for the nine months ended
September 30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. The selected financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.
    
 
                            SELECTED FINANCIAL DATA
   
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
    
 
   
<TABLE>
<CAPTION>
                                                                                                               NINE MONTHS ENDED
                                                                      YEAR ENDED DECEMBER 31,                    SEPTEMBER 30,
                                                        ---------------------------------------------------    ------------------
                                                         1991       1992       1993       1994       1995       1995      1996(1)
                                                        -------    -------    -------    -------    -------    -------    -------
                                                                                                                  (UNAUDITED)
<S>                                                     <C>        <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
  Net sales:
    Water Transmission...............................   $40,992    $44,497    $29,995    $41,105    $61,215    $42,713    $67,202
    Tubular Products.................................    21,106     21,470     24,442     32,536     36,500     29,214     35,247
                                                        -------    -------    -------    -------    -------    -------    -------
      Total net sales................................    62,098     65,967     54,437     73,641     97,715     71,927    102,449
  Cost of sales:
    Water Transmission...............................    38,338     39,049     29,038     35,612     47,835     34,219     50,026
    Tubular Products.................................    16,422     16,982     18,870     26,049     30,304     24,064     29,188
                                                        -------    -------    -------    -------    -------    -------    -------
      Total cost of sales............................    54,760     56,031     47,908     61,661     78,139     58,283     79,214
  Gross profit:
    Water Transmission...............................     2,654      5,448        957      5,493     13,380      8,494     17,176
    Tubular Products.................................     4,684      4,488      5,572      6,487      6,196      5,150      6,059
                                                        -------    -------    -------    -------    -------    -------    -------
      Total gross profit.............................     7,338      9,936      6,529     11,980     19,576     13,644     23,235
  Selling, general and administrative expense:
    Water Transmission...............................     1,549      1,799      2,136      2,173      2,386      1,750      2,832
    Tubular Products.................................       735        895      1,034        822      1,118        839        731
    Corporate........................................     1,743      2,101      2,199      2,724      4,294      2,838      4,666
                                                        -------    -------    -------    -------    -------    -------    -------
      Total selling, general and administrative
        expense......................................     4,027      4,795      5,369      5,719      7,798      5,427      8,229
  Operating income (loss):
    Water Transmission...............................     1,105      3,649     (1,179)     3,320     10,994      6,744     14,344
    Tubular Products.................................     3,949      3,593      4,538      5,665      5,078      4,311      5,328
    Corporate........................................    (1,743)    (2,101)    (2,199)    (2,724)    (4,294)    (2,838)    (4,666)
                                                        -------    -------    -------    -------    -------    -------    -------
      Total operating income.........................     3,311      5,141      1,160      6,261     11,778      8,217     15,006
  Interest expense...................................     2,631      2,425      2,067      2,808      3,448      2,626      1,597
                                                        -------    -------    -------    -------    -------    -------    -------
  Income (loss) before income taxes..................       680      2,716       (907)     3,453      8,330      5,591     13,409
  Provision (benefit) for income taxes...............       272      1,054       (333)     1,292      3,223      2,099      5,363
                                                        -------    -------    -------    -------    -------    -------    -------
  Income (loss) before cumulative effect of
    accounting change................................       408      1,662       (574)     2,161      5,107      3,492      8,046
  Cumulative effect of accounting change(2)..........                             837
                                                        -------    -------    -------    -------    -------    -------    -------
  Net income(3)......................................   $   408    $ 1,662    $   263    $ 2,161    $ 5,107    $ 3,492    $ 8,046
                                                        =======    =======    =======    =======    =======    =======    =======
  Net income per share...............................                                               $  1.43    $  1.03    $  1.45
  Weighted average shares used in net income per
    share............................................                                                 3,695      3,551      5,537
OTHER DATA:
  Depreciation:
    Water Transmission...............................   $ 1,362    $ 1,320    $   900    $   987    $ 1,020    $   729    $ 1,008
    Tubular Products.................................       231        214        200        238        242        194        299
    Corporate........................................        70         86         70         77        100         59         65
                                                        -------    -------    -------    -------    -------    -------    -------
      Total depreciation.............................     1,663      1,620      1,170      1,302      1,362        982      1,372
  Capital expenditures:
    Water Transmission...............................     1,789        466      2,994      1,300      1,194        736      2,069
    Tubular Products.................................       801        682      1,139        267      1,242        743      1,218
    Corporate........................................         2         48         84        100        120        112        123
                                                        -------    -------    -------    -------    -------    -------    -------
      Total capital expenditures.....................     2,592      1,196      4,217      1,667      2,556      1,591      3,410
BALANCE SHEET DATA (AT PERIOD END):
  Working capital....................................   $ 3,388    $13,208    $ 3,234    $ 9,944    $22,438    $10,114    $22,463
  Total assets.......................................    46,121     41,752     44,825     56,808     64,454     63,235    102,328
  Short-term debt (includes current portion of
    long-term obligations)...........................    12,093      1,635     14,254     13,478      4,512     17,276     27,760
  Long-term obligations, less current portion........    16,981     15,422     16,251     20,998     12,040     18,266     14,536
  Stockholders' equity...............................     6,320      8,865      9,358     11,519     33,729     15,011     41,812
</TABLE>
    
 
- ---------------
 
   
(1) The Statement of Operations Data for the nine months ended September 30,
    1996 and the Balance Sheet Data as of September 30, 1996 include the
    accounts of the Company's wholly-owned subsidiary, Thompson Pipe and Steel
    from May 31, 1996, the date of the acquisition. See Note 2 of Notes to the
    Company's Consolidated Financial Statements.
    
 
(2) See Note 14 of Notes to the Company's Consolidated Financial Statements.
 
(3) Net income for the year ended December 31, 1993 includes a $837,000 benefit
    reflecting the cumulative effect of a change in method of accounting for
    income taxes. See Note 14 of Notes to the Consolidated Financial Statements
    of the Company.
 
                                       16
<PAGE>   18
 
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company manufactures Water Transmission products in facilities located
in Portland, Oregon, Denver, Colorado and Adelanto, California. The Adelanto
facility was constructed by the Company in 1990. The Denver, Colorado facility
was obtained through the acquisition of Thompson Pipe and Steel in May, 1996.
Tubular Products are manufactured in the Company's Portland, Oregon and
Atchison, Kansas facilities. The Company believes that the Tubular Products
business, in conjunction with the Water Transmission business, provides a
significant degree of market diversification, because the principal factors
affecting demand for Water Transmission products are different from those
affecting demand for Tubular Products. Demand for Water Transmission products is
generally based on population growth and movement, changing water sources and
replacement of aging infrastructure. Demand can vary dramatically within the
Company's market area since each population center determines its own waterworks
requirements. Demand for Tubular Products is influenced by non-residential
construction, the agricultural economy and general economic conditions.
 
COMPANY HISTORY
 
     Northwest Pipe Company was formed in 1966. In 1982, the principal owners of
the Company formed a partnership to acquire certain assets of the Company's main
competitor in the Pacific Northwest, which were then leased to the Company.
Continuing this growth strategy, the Company opened manufacturing facilities in
Atchison, Kansas and Fairfield, California in 1984. While the Kansas facility
has now become a major contributor to the Company's operations, slow markets
adversely affected its initial operations. The Fairfield operation proved to be
unsuitably located and problems in bringing the plant into production resulted
in unexpectedly high operating costs. Slow markets, increased overhead and
expansion costs reduced the Company's working capital. By December 1985, the
Company was financially overextended and voluntarily filed for Chapter 11
reorganization. During the Chapter 11 proceedings, William R. Tagmyer joined the
Company as the new Chief Executive Officer. Mr. Tagmyer led the Company through
the Chapter 11 proceedings and the reorganized company emerged from bankruptcy
in December 1986. In early 1987, significant equity investments were made by new
investors, including Interven II, L.P. and Norwest Growth Fund, Inc.
 
     With new management and owners in place, the Company began to refocus its
business operations. The facility in Fairfield, California was closed in 1987,
leaving operations in Portland, Oregon and Atchison, Kansas. In 1990, a new
manufacturing facility was built in Adelanto, California, to serve the market
for water transmission pipe in southern California. The Company was not
profitable in 1990 principally due to start up problems at the California
facility, including manufacturing inefficiencies, equipment limitations and an
inexperienced workforce. In 1990 and 1991, the California facility recorded cost
of sales in excess of net sales in the amounts of $619,000 and $1.2 million,
respectively. By 1992, many of the start-up issues had been resolved and the
California facility recorded a gross profit of $2.3 million, representing a $3.5
million increase over 1991. By 1993, the Company expected the California
facility to be a major contributor to the Company's overall profitability.
However, a significantly reduced number of waterworks projects were put out to
bid in 1993. The reduced public spending and the low level of construction
activity caused margins on remaining projects to decline as the Company and its
competitors bid aggressively on the limited opportunities available. As a
result, the California facility's net sales declined by $10.2 million and gross
profit declined from $2.3 million in 1992 to $145,000 in 1993. By the second
quarter of 1994, Water Transmission construction activity increased and the
California facility's sales volume and profitability both increased
substantially. In 1994, the California facility generated $22.9 million in net
sales and gross profit of $2.9 million.
 
     Since 1993 the Company has taken a number of steps, including management
changes and expanded marketing efforts, to mitigate the impact of future
downturns in its Water Transmission markets. The sales and marketing activities,
which were previously organized independently for each facility, were
consolidated into a single department. The Company also coordinated production
efforts to maximize capacity utilization in each of its facilities. With these
changes, all of the regions served by the Company's Water Transmission
 
                                       17
<PAGE>   19
 
business are treated as a single integrated market. In addition, the Company's
current personnel at the California facility are more experienced and have
developed closer relationships with the customer base. As a result, the Company
is better informed with respect to the status of projects coming up for bid. The
Company also has devoted more marketing resources to the Rocky Mountain region,
southwestern Canada, northern California and Las Vegas. Finally, the Company's
recent acquisition of Thompson Pipe and Steel broadens its current geographic
reach for Water Transmission pipe into the midwest and central United States. By
marketing to a larger geographic area and treating all of the regions served as
a single integrated market, the Company believes that it will be less dependent
on the conditions in any one specific region.
 
     The following table sets forth, for the periods indicated, certain
financial information regarding costs and expenses expressed as a percentage of
total net sales and net sales of the Company's business segments.
 
   
<TABLE>
<CAPTION>
                                                                                                               NINE MONTHS
                                                                                                                  ENDED
                                                                      YEAR ENDED DECEMBER 31,                 SEPTEMBER 30,
                                                           ---------------------------------------------     ---------------
                                                           1991      1992      1993      1994      1995      1995      1996
                                                           -----     -----     -----     -----     -----     -----     -----
<S>                                                        <C>       <C>       <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
  Net sales:
    Water Transmission...................................   66.0%     67.5%     55.1%     55.8%     62.6%     59.4%     65.6%
    Tubular Products.....................................   34.0      32.5      44.9      44.2      37.4      40.6      34.4
                                                           -----     -----     -----     -----     -----     -----     -----
  Net sales..............................................  100.0     100.0     100.0     100.0     100.0     100.0     100.0
  Cost of sales..........................................   88.2      84.9      88.0      83.7      80.0      81.0      77.3
                                                           -----     -----     -----     -----     -----     -----     -----
  Gross profit...........................................   11.8      15.1      12.0      16.3      20.0      19.0      22.7
  Selling, general and administrative....................    6.5       7.3       9.9       7.8       8.0       7.6       8.1
                                                           -----     -----     -----     -----     -----     -----     -----
  Operating income.......................................    5.3       7.8       2.1       8.5      12.0      11.4      14.6
  Interest expense.......................................    4.2       3.7       3.8       3.8       3.5       3.6       1.5
                                                           -----     -----     -----     -----     -----     -----     -----
  Income (loss) before income taxes......................    1.1       4.1      (1.7)      4.7       8.5       7.8      13.1
  Provision (benefit) for income taxes...................    0.4       1.6      (0.6)      1.8       3.3       2.9       5.2
                                                           -----     -----     -----     -----     -----     -----     -----
  Income (loss) before cumulative effect of accounting
    change...............................................    0.7       2.5      (1.1)      2.9       5.2       4.9       7.9
  Cumulative effect of accounting change(1)..............                        1.5                            --        --
                                                           -----     -----     -----     -----     -----     -----     -----
  Net income.............................................    0.7%      2.5%      0.4%      2.9%      5.2%      4.9%      7.9%
                                                           =====     =====     =====     =====     =====     =====     =====
SEGMENT DATA:
  Gross profit as a percentage of segment net sales:
    Water Transmission...................................    6.5%     12.2%      3.2%     13.4%     21.9%     19.9%     25.6%
    Tubular Products.....................................   22.2      20.9      22.8      19.9      17.0      17.6      17.2
  Operating income as a percentage of segment net sales:
    Water Transmission...................................    2.7%      8.2%     (3.9)%     8.1%     18.0%     15.8%     21.3%
    Tubular Products.....................................   18.7      16.7      18.6      17.4      13.9      14.8      15.1
</TABLE>
    
 
- ---------------
(1) See Note 14 of Notes to Consolidated Financial Statements.
 
   
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1995
    
 
   
     Net sales increased 42.4% from $71.9 million in the first nine months of
1995 to $102.4 million in the first nine months of 1996. Sales increased in both
business segments. Water Transmission net sales increased 57.3% from $42.7
million in the first nine months of 1995 to $67.2 million in the first nine
months of 1996, primarily as a result of an increase in the number of projects
bid in the Company's geographical market areas and the number of successful bids
in prior periods which resulted in increased production during the nine months
ended September 30, 1996. Tubular Products net sales increased 20.7% from $29.2
million in the first nine months of 1995 to $35.2 million in the first nine
months of 1996. The increase was primarily the result of increased sales of well
casing products. In the first nine months of 1996, sales to one Water
Transmission customer represented 10.2% of total net sales. In the first nine
months of 1995, sales to another single Water Transmission customer represented
17.3% of total net sales.
    
 
   
     Gross profit increased 70.3% from $13.6 million (19.0% of total net sales)
in the first nine months of 1995 to $23.2 million (22.7% of total net sales) in
the first nine months of 1996. Water Transmission gross profit increased 102.2%
from $8.5 million (19.9% of segment net sales) in the first nine months of 1995
to
    
 
                                       18
<PAGE>   20
 
   
$17.2 million (25.6% of segment net sales) in the first nine months of 1996.
This increase was primarily attributable to improved margins resulting from
increased plant utilization. Gross profit from Tubular Products increased 17.7%
from $5.2 million (17.6% of segment net sales) in the first nine months of 1995
to $6.1 million (17.2% of segment net sales) in the first nine months of 1996,
primarily the result of increased sales volume.
    
 
   
     Selling, general and administrative expenses increased 51.6% from $5.4
million (7.6% of total net sales) in the first nine months of 1995 to $8.2
million (8.1% of total net sales) in the first nine months of 1996. The increase
is largely attributable to the one-time costs associated with the acquisition of
Thompson Pipe and Steel in May 1996 and to its operating costs since that time
as well as the costs of litigating an environmental issue with the EPA. During
the third quarter the parties to this dispute reached an agreement in principle
to settle the litigation. See "Business -- Environmental Matters." The Company
recorded an expense of $1.0 million in connection with this agreement, which was
partially offset by the resolution of certain other litigation that resulted in
a $775,000 gain.
    
 
   
     Interest expense decreased 39.2% from $2.6 million in the first nine months
of 1995 to $1.6 million in the first nine months of 1996. This resulted from a
decrease in average borrowings outstanding due to the application of the
proceeds of the initial public offering in November 1995 and was partially
offset by the additional debt resulting from the acquisition of Thompson Pipe
and Steel.
    
 
   
     The provision for income taxes increased from $2.1 million in the first
nine months of 1995 to $5.4 million in the first nine months of 1996 due
primarily to increased pre-tax income. The provision for income taxes in 1995
also reflected the use of net operating loss carryforwards and tax credits which
reduced the Company's tax provision. In connection with the acquisition of
Thompson Pipe and Steel, the Company acquired net operating loss carryforwards
which, due to an "ownership change" as defined under section 382 of the Internal
Revenue Code of 1986, as amended, are subject to an annual limitation of
approximately $340,000 during the 15 year carryforward period.
    
 
   
     As a result of the foregoing factors, net income increased 130.4% from $3.5
million (or 4.9% of net sales) in the first nine months of 1995 to $8.0 million
(or 7.9% of net sales) in the first nine months of 1996.
    
 
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
 
     Net sales increased 32.7% from $73.6 million in 1994 to $97.7 million in
1995. Net sales from the Water Transmission business increased 48.9% from $41.1
million in 1994 to $61.2 million in 1995. This increase was primarily the result
of improved market conditions in California. Tubular Products net sales
increased by 12.2% from $32.5 million in 1994 to $36.5 million in 1995. Growth
in the Company's Tubular Products net sales was largely due to increased sales
of water well casing products and fire protection sprinkler system products. In
1995, sales of Water Transmission products to a single customer represented
12.0% of net sales.
 
     Gross profit increased 63.4% from $12.0 million (or 16.3% of net sales) in
1994 to $19.6 million (or 20.0% of net sales) in 1995. Gross profit from the
sale of Water Transmission products increased 143.6% from $5.5 million in 1994
to $13.4 million in 1995. This increase was attributable to higher sales,
improved margins as a result of increased capacity utilization and less
price-based competition. Gross profit from the sale of Tubular Products
decreased 4.5% from $6.5 million in 1994 to $6.2 million in 1995.
 
     Selling, general and administrative expenses increased 36.4% from $5.7
million (or 7.8% of net sales) in 1994 to $7.8 million (or 8.0% of net sales) in
1995. Water Transmission selling, general and administrative expenses increased
9.8% from $2.2 million in 1994 to $2.4 million in 1995 due to general increases
in expenses. Tubular Products selling, general and administrative expenses
increased 36.0% from $822,000 in 1994 to $1.1 million in 1995. This increase was
due to increases in salaries, benefits and other expenses and to increases in
trade receivable provision for doubtful accounts. Corporate administrative costs
increased from $2.7 million in 1994 to $4.3 million in 1995. Approximately
$700,000 of this increase related to accruals for the Company's discretionary
incentive compensation plan, which covers all salaried employees. An additional
$500,000 of the increase is related to professional fees and outside consultants
engaged in numerous projects
 
                                       19
<PAGE>   21
 
involving environmental, legal and financial matters. The balance of the
increase related to general increases in salaries, benefits and other operating
expenses.
 
     Interest expense increased 22.8% from $2.8 million in 1994 to $3.4 million
in 1995. This increase was due to higher interest rates and increased borrowings
incurred to finance the Company's operations and growth.
 
     The provision for income taxes increased from $1.3 million in 1994 to $3.2
million in 1995 due primarily to increased pre-tax income. The amounts for 1995
and 1994 reflect the use of net operating loss carryforwards and tax credits to
reduce the Company's tax provision. The Company had no net operating loss
carryforward remaining at December 31, 1995.
 
     As a result of the foregoing factors, net income increased 136.3% from $2.2
million (or 2.9% of net sales) in 1994 to $5.1 million (or 5.2% of net sales) in
1995.
 
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
 
     Net sales increased 35.3% from $54.4 million in 1993 to $73.6 million in
1994. Water Transmission sales increased $11.1 million, or 37.0%, and Tubular
Products sales increased $8.1 million, or 33.1%. Increases in Water Transmission
sales were largely due to improved market conditions in southern California as
many previously delayed projects got underway. Tubular Products sales increased
due to improved market conditions in the midwest and the western United States.
 
     Gross profit increased 83.5% from $6.5 million (or 12.0% of net sales) in
1993 to $12.0 million (or 16.3% of net sales) in 1994. The gross profit in the
Water Transmission business increased 474.0% from $1.0 million in 1993 to $5.5
million in 1994, due both to greater sales and to operational improvements in
the Company's California facility. Tubular Products gross profit increased 16.4%
from $5.6 million in 1993 to $6.5 million in 1994 due to increased sales.
 
     Selling, general and administrative expenses increased 6.5% from $5.4
million (or 9.9% of net sales) in 1993 to $5.7 million (or 7.8% of net sales) in
1994. Water Transmission selling, general and administrative expenses increased
1.7% from $2.1 million in 1993 to $2.2 million in 1994. Tubular Products
selling, general and administrative expenses decreased 20.5% from $1.0 million
in 1993 to $822,000 in 1994 due to cost control measures and personnel changes
implemented by the Company. Corporate administrative expenses increased 23.9%
from $2.2 million in 1993 to $2.7 million in 1994. Substantially all of this
increase was attributable to payments under the Company's discretionary
incentive compensation plan in recognition of the improvements in the Company's
performance.
 
     Interest expense increased 35.8% from $2.1 million in 1993 to $2.8 million
in 1994. This increase was due to higher interest rates and increased borrowings
incurred to finance the Company's growth in 1994.
 
     There was an income tax benefit of $333,000 in 1993 due to the Company's
loss before taxes. The provision for income taxes increased to $1.3 million in
1994 based on income before taxes of $3.5 million.
 
     The recognition of the cumulative effect of a change in method of
accounting for income taxes on initial adoption of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes", as of January 1,
1993, of $837,000 is reflected in the statement of operations for the year ended
December 31, 1993.
 
     As a result of the foregoing factors, net income increased from $263,000 in
1993 to $2.2 million in 1994.
 
LIQUIDITY AND CAPITAL RESOURCES
 
   
     The Company finances operations with internally generated funds and
available borrowings under its Line of Credit. The Company's working capital was
$22.5 million at September 30, 1996, compared to $22.4 million at December 31,
1995.
    
 
   
     Net cash used in operating activities in the first nine months of 1996 was
$7.7 million. This was primarily a net result of $8.0 million of net income,
increases in accounts receivable and inventories of $13.9 million and $2.4
million, respectively, and a decrease in accounts payable and costs and
estimated earnings in excess of billings on uncompleted contracts of $3.7
million and $2.5 million, respectively. These changes were primarily
attributable to the 42.4% sales increase in the first nine months of 1996.
    
 
                                       20
<PAGE>   22
 
   
     Net cash used in investing activities in the first nine months of 1996 was
$6.1 million. The primary uses of funds were the acquisition, net of cash
acquired, of Thompson Pipe and Steel for $3.1 million, additions to property and
equipment of $2.7 million. The following amounts, which are included in the
accompanying consolidated statement of cash flows as a net amount of $3.1
million, are the primary effects of Thompson Pipe and Steel on the Company's
Consolidated Balance Sheet at the date of acquisition: accounts receivable
increased $7.0 million; property and equipment increased $8.1 million; accounts
payable increased $3.1 million; accrued liabilities increased $5.5 million;
long-term debt increased $3.7 million; note payable to a financial institution
increased $3.3 million; and capital lease obligations increased $2.4 million.
The principal additions to property and equipment in the first nine months of
1996 were for a new pipe coating system and a new laser seam tracking system.
    
 
   
     Net cash provided by financing activities was $17.2 million in the first
nine months of 1996. As a result of the foregoing, the Company's net cash
increased $3.5 million to $4.3 million as of September 30, 1996.
    
 
   
     At September 30, 1996, the Company had a $44.0 million Line of Credit.
Advances under the Line of Credit are limited to the sum of (i) 85% of eligible
accounts receivable, (ii) 60% of eligible inventory, and (iii) 50% of eligible
costs and estimated earnings in excess of billings on uncompleted contracts.
Advances under the Line of Credit bear interest at prime (8.25% at September 30,
1996). As of September 30, 1996 the current borrowing base yielded unused
capacity of $8.4 million under the Line of Credit. Advances under the Line of
Credit are secured by substantially all of the Company's assets. The Line of
Credit expires in April, 2001.
    
 
   
     The Company's working capital requirements have increased due to the
increase in the Company's Water Transmission business which is characterized by
lengthy production periods and by extended payment cycles. However, the Company
anticipates that its cash flow from operations, the proceeds from this offering
and amounts available under the Line of Credit will be adequate to fund its
working capital and capital requirements for at least the next twelve months.
The Company has three significant components of debt: the Line of Credit bearing
interest at prime, which had unused capacity of $8.4 million at September 30,
1996 and expires in 2001; Industrial Development Bonds in the aggregate amount
of $4.0 million with variable interest rates of 4.20% and 3.85% at September 30,
1996; and capital leases aggregating $4.8 million bearing interest at rates
ranging from 4.20% to 11.25% at September 30, 1996.
    
 
     To the extent necessary, the Company may also satisfy capital requirements
through additional bank borrowings and capital leases if such resources are
available on satisfactory terms. The Company has from time to time evaluated and
continues to evaluate opportunities for acquisitions and expansion and,
consistent with this practice, is currently engaged in preliminary discussions
with other parties regarding possible acquisitions. Any such transactions, if
consummated, may use a portion of the Company's working capital or necessitate
additional bank borrowings.
 
     On February 7, 1996 the Company's production at its Oregon facility was
interrupted by a flood resulting in approximately $450,000 in direct costs. The
Company is working with its insurer to recover direct flood costs and the costs
associated with business interruption. The recovery amount is not determinable
at this time, but the Company does not anticipate any further negative impact on
its operations as a result of the flood.
 
   
     The Company has been identified as one of four potentially responsible
parties with potential liability for a Superfund site in Clackamas, Oregon. In
October 1995, the Company filed a complaint seeking a declaratory judgment from
the Bankruptcy Court that any claims with respect to liability for the costs of
the Response Activities at the Site were discharged by the Bankruptcy Court's
confirmation of the Company's Plan of Reorganization. In September 1996, the
Company entered into mediation with the Agencies in an attempt to resolve the
matter without incurring the substantial additional expense of continuing the
litigation. As a result of the mediation process, the Company and the Agencies
entered into an agreement in principle with respect to a proposed settlement of
the litigation (the "Settlement Agreement"). Under the terms of the Settlement
Agreement, the Company would pay the Agencies $1.0 million, and deposit an
additional $2.3 million in an escrow account or trust (the "Trust"), with the
interest income on the Trust to be distributed to the Agencies. A condition of
the Settlement Agreement is that title to the portion of the Site that is
currently vacant (the "Property") be transferred to the Agencies.
    
 
                                       21
<PAGE>   23
 
   
     The Settlement Agreement provides that the Agencies would complete
construction of the remedial action at the Property in accordance with their
standards and would have the right to sell the Property at any time during the
clean-up process. If the Property is sold by the Agencies during the clean-up
process, the $2.3 million held in the Trust would be returned to the Company.
Once the Property has been remediated as evidenced by completion of construction
of the remedial action and issuance of Remedial Action Reports or their
equivalents and the Property is usable for a "reasonable commercial or
industrial use", the Agencies would have the option to continue to market the
Property for one year. If the Property is not sold during this period, the
Company could elect to have the Property conveyed to it in exchange for the $2.3
million held in the Trust. If the Company takes ownership of the Property and
sells it within one year thereafter; fifty percent of any net proceeds in excess
of $2.3 million would have to be paid to the Agencies. The Agencies would
provide a "Prospective Purchaser Agreement" which would specify that any
prospective purchaser of the Property would not be liable for any past
environmental contamination or any ongoing remediation resulting from past
operations at the Site. If the Company elects not to take ownership of the
Property, the Agencies would retain the $2.3 million held in the Trust. If the
Agencies are unable to complete construction of the remedial action and clean up
soils so that the Property can be used for a reasonable commercial or industrial
use within ten years, they would be required to return the $2.3 million held in
the Trust to the Company.
    
 
   
     The Company believes that once the Property is available for a "reasonable
commercial or industrial use", it would have a value in excess of $2.3 million.
Consequently, the Company does not believe that the $2.3 million held in the
Trust is "impaired" under generally accepted accounting principles. Accordingly,
the Company has recorded the $1.0 million payment as an expense in the third
quarter of 1996 and will segregate the $2.3 million as a restricted asset on its
balance sheet when the Trust is established.
    
 
   
     Although the Settlement Agreement reflects the material terms of the
proposed settlement agreed to by the Company and the Agencies, the Settlement
Agreement does not represent a final settlement of the litigation. A final
binding settlement of the litigation will be effected only through the
Bankruptcy Court's entry of a Consent Decree for the Site, which must be
prepared and agreed upon, and which is subject to public comment and the
approval of the United States Department of Justice, the EPA, the State of
Oregon and the Company's Board of Directors. No assurance can be given that the
Company and the Agencies will be able to reach agreement on a mutually
acceptable Consent Decree, that the terms of any such Consent Decree will be
substantially the same as those set forth in the Settlement Agreement or that
any such Consent Decree will be approved by all required parties.
    
 
   
     In the event that the Company and the Agencies are not able to achieve a
settlement and the bankruptcy defense is unsuccessful, the Company's ultimate
liability will depend on the total costs of the Response Activities, the related
costs and fees of the allocation process, the PRPs' relative contribution of
contaminants at the Site and the final allocation of costs to the Company which
may ultimately result in litigation and take several years to determine. Based
upon a preliminary estimate of the types of contaminants found and the number of
years each PRP owned or operated on the Site, the Company believes that, if a
settlement is not achieved and its bankruptcy defense is unsuccessful, its
liability for Response Activities and the costs and fees of the allocation
process would range from $4.0 million to $6.0 million on an undiscounted basis.
This range assumes that the Company will not be held responsible for costs which
are allocable to the other PRPs; however, there is no assurance that the Company
will not ultimately bear liability with respect to such costs. If the Company is
ultimately found to have liability to the EPA or the DEQ, for a significant
portion of the clean-up costs with respect to this site, there could be a
material adverse effect on the Company's working capital and liquidity. See
"Business -- Environmental Matters."
    
 
                                       22
<PAGE>   24
 
QUARTERLY RESULTS OF OPERATIONS
 
     The following table sets forth certain unaudited quarterly financial
information for each of the Company's last eight fiscal quarters. In the opinion
of management, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the information are set forth herein.
 
   
<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED
                                              -------------------------------------------------------------------------------
                                              12/31/94   3/31/95   6/30/95   9/30/95   12/31/95   3/31/96   6/30/96   9/30/96
                                              --------   -------   -------   -------   --------   -------   -------   -------
                                                                              (IN THOUSANDS)
<S>                                           <C>        <C>       <C>       <C>       <C>        <C>       <C>       <C>
Net sales:
  Water Transmission........................  $15,732    $13,071   $13,952   $15,690   $18,502    $20,807   $20,877   $25,518
  Tubular Products..........................    8,158     9,713     9,789     9,712      7,286    10,164    12,241    12,842
                                              -------    ------    ------    ------    -------    ------    ------    ------
    Net sales...............................   23,890    22,784    23,741    25,402     25,788    30,971    33,118    38,360
                                              -------    ------    ------    ------    -------    ------    ------    ------
Cost of sales:
  Water Transmission........................   13,353    10,058    10,931    13,230     13,616    15,432    15,538    19,056
  Tubular Products..........................    6,609     7,921     8,001     8,142      6,240     8,158    10,096    10,934
                                              -------    ------    ------    ------    -------    ------    ------    ------
    Total cost of sales.....................   19,962    17,979    18,932    21,372     19,856    23,590    25,634    29,990
                                              -------    ------    ------    ------    -------    ------    ------    ------
Gross profit:
  Water Transmission........................    2,379     3,013     3,021     2,460      4,886     5,375     5,339     6,462
  Tubular Products..........................    1,549     1,792     1,788     1,570      1,046     2,006     2,145     1,908
                                              -------    ------    ------    ------    -------    ------    ------    ------
    Total gross profit......................    3,928     4,805     4,809     4,030      5,932     7,381     7,484     8,370
                                              -------    ------    ------    ------    -------    ------    ------    ------
Selling, general and administrative:
  Water Transmission........................      538       723       596       431        636       758       903     1,171
  Tubular Products..........................      217       327       250       262        279       252       236       243
  Corporate.................................    1,020     1,203       910       725      1,456     1,356     1,560     1,750
                                              -------    ------    ------    ------    -------    ------    ------    ------
Total selling, general
  and administrative........................    1,775     2,253     1,756     1,418      2,371     2,366     2,699     3,164
                                              -------    ------    ------    ------    -------    ------    ------    ------
Operating income (loss):
  Water Transmission........................    1,841     2,290     2,425     2,029      4,250     4,617     4,436     5,291
  Tubular Products..........................    1,332     1,465     1,538     1,308        767     1,754     1,909     1,665
  Corporate.................................   (1,020)   (1,203)     (910)     (725)     (1,45)   (1,356)   (1,560)   (1,750)
                                              -------    ------    ------    ------    -------    ------    ------    ------
Total operating income......................    2,153     2,552     3,053     2,612      3,561     5,015     4,785     5,206
Interest expense............................      774       916       870       840        822       400       452       745
                                              -------    ------    ------    ------    -------    ------    ------    ------
Income before income taxes..................    1,379     1,636     2,183     1,772      2,739     4,615     4,333     4,461
Provision for income taxes..................      517       610       816       673      1,124     1,846     1,733     1,784
                                              -------    ------    ------    ------    -------    ------    ------    ------
Net income..................................  $   862    $1,026    $1,367    $1,099    $ 1,615    $2,769    $2,600    $2,677
                                              =======    ======    ======    ======    =======    ======    ======    ======
</TABLE>
    
 
                                       23
<PAGE>   25
 
                                    BUSINESS
 
BACKGROUND
 
     The Company manufactures and markets welded steel pipe in two business
segments. In its Water Transmission business segment, the Company is a leading
supplier in the United States and Canada of large diameter, high pressure steel
pipe used primarily for water transmission. In its Tubular Products business
segment, the Company manufactures smaller diameter, ERW steel pipe for use in a
wide range of construction, agricultural and industrial applications. In 1995,
Water Transmission and Tubular Products revenues represented approximately 63%
and 37% of the Company's net sales, respectively. Headquartered in Portland,
Oregon, the Company operates four manufacturing facilities. Water Transmission
products are manufactured in Portland, Oregon, Denver, Colorado and Adelanto,
California, and Tubular Products are manufactured in Portland, Oregon and
Atchison, Kansas.
 
   
     From 1990 through 1995, the Company's annual net sales increased from $34.5
million to $97.7 million, while annual operating income increased from $1.0
million to $11.8 million. For the nine months ended September 30, 1996, net
sales increased 42.4% to $102.4 million from $71.9 million for the same period
in 1995, and operating income increased 82.6% to $15.0 million from $8.2 million
for the same period in 1995.
    
 
     Water Transmission. Demand for water transmission products is driven
primarily by projected population growth and movement, establishment of new
water sources and replacement of aging waterworks infrastructure. The
construction of new or expanded water systems is critical to attracting and
supporting both population and economic growth. In addition, many existing water
infrastructure systems must be repaired or replaced to satisfy current and
expanding water needs. The Company believes it is strategically positioned to
capitalize on growing water infrastructure requirements. With facilities located
in Portland, Oregon and Adelanto, California, the Company has historically
served the western United States and southwestern Canada. The recent acquisition
of Thompson Pipe and Steel, located in Denver, Colorado, has expanded the
Company's effective market reach throughout the midwest and central United
States. The Company is now a major supplier of large diameter, high pressure
steel pipe in the United States and is actively seeking other opportunities to
expand its presence in both domestic and international water infrastructure
markets.
 
     Water transmission pipe can generally be categorized by end use, size and
material. Water transmission pipe is used for (i) high pressure applications,
typically requiring pipe able to withstand pressures in excess of 150 pounds per
square inch, (ii) low pressure applications such as gravity-flow wastewater and
sewers and (iii) other industrial and structural applications. Water
transmission pipe ranges in size, with pipe greater than 24" in diameter
generally considered "large" diameter. Water transmission pipe is manufactured
from steel, concrete or ductile iron, with each pipe material having advantages
and disadvantages. Since ductile iron is generally limited in diameter due to
its manufacturing process, concrete and steel are more common materials for
larger diameter water transmission pipelines. The public agencies and engineers
who determine the specifications for water transmission projects analyze these
pipe materials for suitability for each project. While individual project
circumstances can dictate the preferred material, in general the Company
believes concerns about the durability of concrete pipelines have led to
increased use of steel pipe.
 
     The Company has identified several factors that contribute to the success
of its Water Transmission business segment:
 
   
     - Active Markets.  Demand for the Company's Water Transmission products
       continues to be strong as public agencies within the Company's market
       areas address their water transmission requirements. At September 30,
       1996, the Company had identified more than 500 projects within its market
       areas scheduled to be bid through 1999. The Company estimates these
       projects include water transmission pipe with a value of approximately
       $2.0 billion. No assurance can be given that these projects will be let
       for bid, awarded to the Company or built as scheduled.
    
 
     - Key Locations and Manufacturing Capabilities. The Company's strategically
       located manufacturing facilities enable the Company to address the demand
       for steel water transmission pipe in most of the United States and
       Canada. The Company's manufacturing capabilities allow it to meet a broad
       range
 
                                       24
<PAGE>   26
 
       of contract specifications including different pipe diameters and
       thicknesses, various coating and lining materials, and a variety of
       specialty fabrications.
 
     - Substantial Share of Projects Bid. The dollar value of projects awarded
       to the Company as a percentage of the value of projects bid by the
       Company has increased as illustrated below:
 
   
<TABLE>
<CAPTION>
                                     PERIOD                            PERCENTAGE
            ---------------------------------------------------------  ----------
            <S>                                                        <C>
            1993.....................................................     27.7%
            1994.....................................................     30.3%
            1995.....................................................     35.0%
            Nine Months Ended September 30, 1996.....................     35.0%
</TABLE>
    
 
   
       Management believes this increase is the result of the Company's emphasis
       on marketing activities, its focus on developing strong relationships
       with contractors, public works agencies and engineering firms and its
       increased experience in the southern California market. The rate for the
       first nine months of 1996 is not necessarily indicative of the rate that
       will be obtained for the full twelve months of 1996. In general, the
       Company does not expect substantial further improvement of its market
       share in its historical market areas. However, the Company believes its
       recent acquisition of Thompson Pipe and Steel provides opportunities to
       increase the Company's penetration of market areas east of the Rocky
       Mountains.
    
 
     Tubular Products.  The Company's Tubular Products range in size from 4" to
16" in diameter and are marketed through a network of direct sales force
personnel and independent distributors in the United States and Canada. The
Company has historically focused on niche markets that typically generate strong
margins due to limited competition. The tubular products industry, however,
serves very large markets with products that generally have wall thicknesses
greater than those that the Company has traditionally manufactured. The Company
is currently expanding its business into these higher volume segments of the
tubular products industry by building on its key strengths of location,
established distribution channels and manufacturing expertise.
 
     Generally, there is little product differentiation among tubular product
manufacturers. Manufacturers compete with one another primarily on the basis of
price, established business relationships, customer service and delivery.
However, in a number of sectors within the tubular products industry,
competition may be less vigorous due to the existence of a relatively small
number of companies with the capabilities to manufacture certain products. In
particular, the Company operates in a variety of different markets that require
pipe with lighter wall thicknesses in relation to diameters than many of the
Company's competitors can manufacture.
 
     The Company has identified several factors that contribute to the success
of its Tubular Products business segment:
 
     - Well Positioned in Niche Markets.  The Company has historically
       manufactured and continues to produce pipe products with light wall
       thicknesses in relation to diameters. These products are sold in niche
       markets with limited competition and typically generate high margins. The
       Company believes it is well positioned to maintain its competitive
       position.
 
     - Expanding Product Lines.  The Company has adopted a strategy of expanding
       its product lines to better utilize the available capacity in each of its
       facilities. While the Company's new products generally produce lower
       margins than the Company's niche products, the increased volume
       contributes to the Company's profitability.
 
     - Diversified Demand.  The Tubular Products business segment benefits from
       a customer base that extends across numerous industries. Demand for the
       Company's three primary Tubular Product groups are determined by
       different economic factors. The demand for products used in fire
       protection sprinkler systems is affected by non-residential construction
       activity. The demand for products used in irrigation and other
       agricultural applications is related to the farm economy. The demand for
       industrial products is determined by the overall economy. This
       diversification helps mitigate the Company's exposure to specific
       industry or general business cycles.
 
                                       25
<PAGE>   27
 
STRATEGY
 
     The Company has a growth strategy for each of its business segments. The
Company seeks to maintain its current position as a leading supplier of Water
Transmission products in the United States and Canada. Additionally, the Company
believes opportunities exist within the broader water infrastructure market for
both geographic expansion and expansion into related products or services. The
Company expects to use its understanding of this market, customer relationships
and manufacturing expertise to increase its presence in this business. The
Company's Tubular Products strategy is to maintain its strong position in high
margin niche markets. The Company will also continue to seek opportunities to
add individual products or product lines that afford the Company a competitive
advantage, including the ability to use its available manufacturing capacity and
existing distribution channels more effectively.
 
     The key elements of the Company's strategies are:
 
   
     Expanding the Water Transmission Business. In 1990, the Company opened a
facility in California to address the southern California water transmission
infrastructure market. Since entering the southern California market in 1990,
the Company has generated revenues of $172 million from its southern California
plant and has become a significant supplier of steel Water Transmission pipe
throughout the southwestern United States. In May 1996, the Company acquired a
facility in Denver, Colorado as part of the Thompson Pipe and Steel acquisition.
The Denver facility has operated since 1878 and has been a significant supplier
of steel Water Transmission pipe in the Rocky Mountain region. Since January 1,
1991, the Denver facility has generated $149 million in revenues primarily from
projects in the Rocky Mountain region and from selected projects in the eastern
United States. The Company expects to continue to benefit from its added
manufacturing capacity and its ability to serve the needs of the water
transmission market in the western United States as well as the ability to enter
new markets east of the Rocky Mountains.
    
 
     Extending Product Lines in Tubular Products.  In addition to adding new
product lines such as fire protection sprinkler system piping and water well
casings, which have both contributed substantially to the Company's growth, the
Company has acquired and plans to install a new Tubular Products production line
in its Portland, Oregon facility at an estimated installed cost of approximately
$10.0 million. The new line will manufacture pipe and tube up to 7" in diameter
for use in industrial piping, oil and gas transmission, fire protection systems
and other applications. The Company believes it will have a competitive
advantage in serving its northwest market area because there are no other
manufacturers of these products in this target market. Currently, these products
are either imported or shipped from domestic mills that are a substantial
distance from the northwest market area.
 
     Pursuing Industry Related Acquisitions.  The Company believes that
acquisitions of companies in similar or related businesses could benefit both
its Water Transmission and Tubular Products businesses and that these
acquisitions will enable it to leverage its manufacturing, marketing and
distribution capabilities. The reduction in debt and increased debt capacity
resulting from this offering will enhance the Company's ability to pursue
strategic acquisitions. The Company has from time to time evaluated and
continues to evaluate opportunities for acquisitions and expansion of its
product lines and is currently engaged in preliminary discussions with other
parties regarding possible acquisitions.
 
PRODUCTS
 
     Water Transmission.  All of the Company's Water Transmission products are
made to custom specifications. Most of these products are for fully engineered,
large diameter, high pressure water transmission lines. Other uses include pipe
piling and pipe for hydroelectric projects, waste water transmission and
treatment plant piping. The Company manufactures Water Transmission products in
diameters ranging from 18" to 144" with wall thicknesses of 0.135" to 0.750".
The Company has the capability to coat and line these products with cement
mortar, polyethylene tapes, paints and coal tar according to the customers'
specifications. The Company maintains complete fabrication facilities and
provides installation contractors with custom fabricated sections as well as
straight pipe sections.
 
                                       26
<PAGE>   28
 
     Tubular Products.  Tubular Products are manufactured by the ERW process and
range in size from 4" to 16" in diameter with wall thicknesses from 0.075" to
0.250". These products are typically sold to pipe distributors or original
equipment manufacturers and are used for a wide variety of applications. The end
uses for Tubular Products can broadly be grouped into construction, agricultural
and industrial applications. The table below lists various applications for
these products:
 
<TABLE>
    <S>                           <C>                           <C>
    CONSTRUCTION                  AGRICULTURE                   INDUSTRIAL AND OTHER
    Fire protection sprinkler     Surface and underground       Water well casing (non-
      pipe                        irrigation mains              agricultural)
    Piling/struts                 Irrigation systems pipe       Waste lines
    Air lines                     Grain handling                Drainage lines
    De-water lines                Water well casing             Filtration pipe
    Penstocks (hydroelectric)     (agricultural)                Steam exhaust
    Sewer outfalls                Perforated pipe for well      Wood chip lines
    Pontoon pipe                  screens                       Pneumatic conveying lines
    Dredge pipe                   Coupler fittings              Sign posts
    Slurry pipe                   Wind towers/frost control
    Process plant piping
    Wind towers
    Water and waste treatment
</TABLE>
 
   
     The Company has historically added new product lines in its Tubular
Products business as management identified opportunities for sustainable growth.
In 1989, the Company entered the fire protection sprinkler system market with
its branded product Flame-Out which generated $11.5 million in sales in 1995. In
1993, the Company began marketing Well-Life, a water well casing product. Sales
of this product have totalled more than $6.0 million since the beginning of
1994. These new products represented an expansion of the Company's focus from
the light-wall, large diameter niche markets to include higher volume, more
competitive markets. The Company recently acquired and plans to install a new
Tubular Products production line in its Portland, Oregon facility. This new
production line will give the Company the ability to manufacture products with
smaller diameters and heavier wall thicknesses for uses in industrial piping,
oil and gas transmission, fire protection systems and other applications.
Notwithstanding the lower margins available in these markets, the Company
pursued these opportunities in order to increase the volume in the Tubular
Products business and to increase profitability. The Company intends to continue
to pursue future opportunities to broaden its product lines by adding products
that will take advantage of the Company's available manufacturing capacity,
existing marketing channels and manufacturing expertise.
    
 
MARKETING
 
     Water Transmission.  The primary customers for Water Transmission products
are installation contractors for projects funded by public water agencies,
including states, municipalities and water districts. Water Transmission
products are manufactured at the Company's Oregon, California and Colorado
facilities and are marketed in the United States and Canada. High freight costs
reduce the Company's competitiveness as the distance from its manufacturing
facility increases.
 
     The Company's Water Transmission marketing strategy emphasizes early
identification of potential water projects, promotion of specifications
consistent with the Company's capabilities and close contact with the project
designers and owners throughout the design phase. The Company's in-house sales
force is composed of sales representatives, engineers and support personnel.
These representatives and engineers work with public water agencies, contractors
and engineering firms, often more than a year in advance of the bidding for a
project, in order to identify and evaluate planned projects.
 
     The Company spends a significant amount of resources accumulating and
updating data on upcoming projects. The Company believes this information is
critical to its planning and operations. As projects within the Company's
markets are identified, they are included in the Company's project tracking
system. This system identifies the key characteristics of each project including
the agency, the size of the pipe, the length of the pipeline, specification
preferences, timing and estimated contract value. This accumulated information
 
                                       27
<PAGE>   29
 
   
gives the Company a well-informed outlook on the markets it serves. At September
30, 1996, the Company had identified more than 500 projects within its market
areas scheduled to be bid through 1999. These projects included water
transmission pipe with a value estimated by the Company to be approximately $2.0
billion. No assurance can be given that these projects will be let for bid,
awarded to the Company or be built as scheduled.
    
 
     As the public water agency continues the process of developing a pipeline
project, the Company's professional engineers provide information to the agency
or its design engineers promoting the advantages of coated and lined steel pipe.
In certain cases, the Company's professional engineers may be successful in
influencing the specifications to favor the Company's products. After the
agencies complete the design, they publicize the upcoming bidding for a water
transmission project. The Company then obtains detailed plans and develops its
estimate for the pipe portion of the project. The Company typically bids to
installation contractors who include the Company's bid in their proposal to the
public water agency. The public water agency generally awards the entire project
to the contractor with the lowest bid.
 
     Tubular Products.  The Company's Tubular Products marketing strategy
focuses on customer service and customer relationships. For example, the Company
is willing to sell in small lot sizes and is able to provide mixed truckloads of
finished products to its customers. Approximately 85% of the Company's Tubular
Products sales have been to pipe distributors, and approximately 15% of sales
have been to original equipment manufacturers (primarily irrigation system
manufacturers). The Company's sales effort emphasizes personal contact with
current and potential customers on a regular basis. The Company supplements this
effort with targeted advertising, participation in trade shows and brochures.
The Company's strategic plant locations in Kansas and Oregon allow the Company
to efficiently serve customers throughout the United States and in Canada.
 
MANUFACTURING
 
     Water Transmission.  The Company manufactures Water Transmission products
at its Oregon, California and Colorado facilities. The process begins with the
preparation of engineered drawings of each unique piece of pipe in the project.
These drawings are prepared on the Company's proprietary computer-aided design
system and are used as blueprints for the manufacture of the pipe. After the
drawings are completed and approved, manufacturing begins by feeding steel coil
continuously at a specified angle into a spiral weld mill which cold forms the
band into a tubular configuration with a spiral seam. Automated arc welders,
positioned on both the inside and the outside of the tube, are used to weld the
seam. The welded tube is then cut at the specified length. After completion of
the forming and welding phases, the finished cylinder is tested and inspected in
accordance with project specifications, which may include 100% radiographic
analysis of the weld seam. The cylinders are then coated and lined as specified.
Possible coatings include coal tar enamel, polyethylene tape, paint, epoxies and
cement mortar. Linings may be coal tar, cement mortar or epoxies. Following
coating and lining, certain pieces may require custom fabrications such as the
addition of elbows or manholes. This process is performed in the Company's
fabrication facilities. The pipe is subjected to final inspection and prepared
for shipment. The Company ships its products to project sites by truck and rail.
 
     Tubular Products.  Tubular Products are manufactured by the ERW process at
the Company's Oregon and Kansas facilities in diameters ranging from 4" to 16".
This process begins by unrolling and slitting steel coils into narrower bands
sized to the circumference of the finished product. Each band is re-coiled and
fed into the material handling equipment at the front end of the ERW mill and
fed through a series of rolls that cold-form it into a tubular configuration.
The resultant tube is welded by high-frequency electric resistance welders and
cut into the appropriate lengths. After exiting the mill, the products are
straightened, inspected, tested and end-finished, and certain products are
coated with lacquer.
 
     Technology.  Advances in technology help the Company produce high quality
products at competitive prices. Recent investments in technological improvements
include a laser seam tracking system, a coil slitter, an ultraviolet pipe
coating system, an in-line ultrasonic testing system and two radiographic
testing systems. To stay abreast of technological developments in the United
States and abroad, the Company participates in trade shows, industry
associations, research projects and vendor trials of new products.
 
                                       28
<PAGE>   30
 
     Quality Assurance.  The Company has adopted quality assurance techniques
and policies which govern every aspect of its operations to ensure high quality.
During and after the manufacturing process, the Company performs many tests,
including tensile, impact, hydrostatic, ultrasonic and radiographic tests. The
Quality Assurance department reports directly to the chief executive officer. As
a reflection of its commitment to quality, the Company has been certified for
certain products or operations by Factory Mutual, Underwriters Laboratory, Steel
Plate Fabricators Association, National Sanitary Foundation and the American
Petroleum Institute.
 
BACKLOG
 
   
     The Company's backlog includes confirmed orders, including the balance of
projects in process. The backlog also includes projects for which the Company
has been notified it is the successful bidder even though a binding agreement
has not been executed. Projects for which a binding contract has not been
executed could be canceled. Binding orders received by the Company may also be
subject to cancellation or postponement, however cancellation would generally
obligate the customer to pay the costs incurred by the Company. As of September
30, 1996 and 1995, the Company's backlog of orders was approximately $45.9
million and $44.0 million, respectively. Backlog as of September 30, 1996
includes projects having a value of approximately $2.7 million for which binding
contracts had not yet been executed. Backlog orders as of any particular date
may not be indicative of actual operating results for any fiscal period. There
can be no assurance that any amount of backlog ultimately will be realized.
    
 
COMPETITION
 
     Water Transmission.  The Company has several competitors in the Water
Transmission segment of its business. High freight costs may limit the ability
of manufacturers located in other market areas to compete with the Company. Most
of the projects in this segment are competitively bid and price competition is
vigorous. Other competitive factors include timely delivery and ability to meet
customized specifications. The Company and Ameron, Inc. are the principal
competitors in the water transmission business in the western United States and
southwestern Canada. Other competitors in this region include California Steel
Pressure Pipe, Inc. and Continental Pipe. East of the Rocky Mountains, the
Company's primary competition includes American Cast Iron Pipe Company, McWane
Cast Iron Company and US Pipe & Foundry Company, all of which manufacture
ductile iron pipe; Price Bros. and Gifford-Hill-American, Inc., which
manufacture concrete cylinder pipe; and L.B. Foster Company, which produces
steel pipe.
 
     The Company is not aware of any competitors that are currently planning to
enter into the water transmission business within the Company's market. The
Company believes that the cost of constructing a facility, the long lead time
before a manufacturing plant could compete effectively, product acceptance and
the high standards for product quality and manufacturing experience required by
project specifications all serve as barriers to entry. However, no assurance can
be given that a new or existing competitor will not establish new facilities or
expand its capacity within the Company's market areas.
 
     Tubular Products.  The market for tubular products is highly fragmented and
diversified with over 100 manufacturers in the United States and a number of
foreign-based manufacturers that export such pipe into the United States.
Manufacturers compete with one another primarily on the basis of price,
established business relationships, customer service and delivery. A substantial
portion of the manufacturers focus their production on heavier wall products,
while the Company has focused its production primarily on light wall,
non-standard products, thereby significantly reducing the number of its
competitors. However, the Company is increasingly introducing products into
higher volume markets with more competition than it experiences with its niche
products.
 
SUPPLIERS
 
     The Company purchases hot rolled steel coil produced by a number of primary
steel producers including Geneva Steel Company, California Steel Industries,
Inc., National Steel Corporation, Tuscaloosa Steel Corporation and LTV Steel
Company. Additionally, Oregon Steel Mills is in the process of adding steel coil
manufacturing capabilities to its facility located approximately one mile from
the Company's Portland manufacturing facility. If Oregon Steel Mills completes
its capital expansion and can supply the Company with steel coil at a
competitive price, the Company expects a sizeable reduction in its in-bound
freight costs.
 
                                       29
<PAGE>   31
 
The Company orders steel according to its business forecasts for its Tubular
Products business. Steel for the Water Transmission business is normally
purchased only after a project has been awarded to the Company, however, the
steel price is generally negotiated in advance of the bidding process. The
Company also relies on certain suppliers of coating materials, lining materials
and certain custom fabricated items. The Company believes its relationships with
its suppliers are positive and does not believe it is dependent on any one
source for these materials.
 
PROPERTIES
 
     The Oregon facility consists of 300,000 square feet of covered
manufacturing space, located on approximately 25 acres. The Company operates
five pipe mills at its Oregon facility. The Kansas facility consists of 55,000
square feet of covered manufacturing space located on 40 acres. The California
facility, which was built in 1990, consists of 70,000 square feet of covered
manufacturing space located on 60 acres. The Company has two pipe mills located
at each of the Kansas and California facilities. The principal assets acquired
by the Company in connection with the acquisition of Thompson Pipe and Steel
were a 40 acre steel pipe facility, including approximately 131,200 square feet
of covered manufacturing space, located in Denver, Colorado and a 64 acre
facility, including approximately 336,120 square feet of covered manufacturing
space, located in Princeton, Kentucky. The Kentucky manufacturing facility was
closed by Thompson Pipe and Steel in 1995. The Company intends to continue
operating the manufacturing facility in Denver, Colorado, and intends to dispose
of the manufacturing facility located in Princeton, Kentucky. The Company owns
all of its facilities, except for the Oregon and Kentucky facilities, which are
each leased to the Company with an option to purchase.
 
     The Company is seeking additional land in Oregon to be used primarily for
storage and production staging purposes. The Company has available manufacturing
capacity at each of its facilities and believes its facilities are adequate for
its immediate and near-term requirements, and it does not anticipate the need
for significant expansion in the next twelve months.
 
EMPLOYEES
 
   
     As of September 30, 1996 the Company had 607 full-time employees.
Approximately 24% were salaried and approximately 76% were employed on an hourly
basis. All of the hourly employees at Thompson Pipe and Steel are represented by
a union.
    
 
ENVIRONMENTAL MATTERS
 
     General.  The Company operates under numerous governmental permits and
licenses relating to air emissions and water discharges, stormwater run-off,
workplace safety and other matters. The Company is not aware of any current
violations or citations relating to any of these permits or licenses. The
Company has a policy of reducing use and consumption of hazardous materials in
its operations by substituting non-hazardous materials when possible.
 
     The Company has entered into an agreement with the Oregon Department of
Environmental Quality (the "DEQ") with respect to the reporting requirements for
calculating emissions of volatile organic compounds ("VOCs") from pipe coating
and lining operations at the Oregon manufacturing facility. Pursuant to the
agreement, the Company has until July 1, 1997 to find coatings that will allow
it to meet the Reasonably Available Control Technology ("RACT") VOC limits set
out in the Company's air permit or to submit an application for an alternative
VOC air emissions limit. The agreement also requires the Company to submit
reports to the DEQ on January 1, 1996, May 1, 1996, September 1, 1996, January
1, 1997 and May 1, 1997 detailing the progress that has been made toward finding
alternative compliant coatings. In order to comply with the RACT VOC limits, the
Company may have to make changes in its operating procedures or the mix of
coating and lining production. No assurance can be given that such changes, if
required, will not have a material adverse affect on the Company's future
business, financial condition or results of operations.
 
     Superfund Site.  The EPA sent a Special Notice Letter for Remedial
Investigation/Feasibility Study dated June 8, 1995 (the "Special Notice") to the
Company notifying the Company of potential liability, as
 
                                       30
<PAGE>   32
 
defined by Section 107(a) of the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA" or "Superfund"), that the
Company may have incurred with respect to a site in Clackamas, Oregon that was
added to the EPA's Superfund National Priorities List ("NPL") on October 14,
1992 (the "Site"). The Company conducted manufacturing operations on a portion
of the Site prior to its Chapter 11 Bankruptcy in 1986. The Company has not
owned, leased or operated at the Site since the confirmation of the Company's
Plan of Reorganization on December 11, 1986 (the "Plan").
 
     The Special Notice states that the EPA believes that the Company may be a
Potentially Responsible Party ("PRP") with respect to the Site. Three other
parties also received Special Notice letters naming them as PRPs with respect to
the Site. Under Sections 106(a) and 107(a) of CERCLA, Section 7003 of the
Resource Conservation and Recovery Act and similar provisions under Oregon laws,
PRPs may be ordered to perform response actions deemed necessary by the EPA to
protect the public health, welfare or the environment. Such actions may include,
but are not limited to, conducting a Remedial Investigation/ Feasibility Study
("RI/FS"), conducting a Remedial Design/Remedial Action, and other
investigation, planning and remediation activities (collectively, "Response
Activities"). The Special Notice triggered a 60-day period during which the
PRPs, including the Company, were invited to participate in formal negotiations
with EPA. The Special Notice also encouraged the PRPs to negotiate a settlement
providing for the conduct by the PRPs of Response Activities at the Site.
 
     By letter dated June 30, 1995, the Company advised the EPA of its position
that any claims by the EPA with respect to liability for Response Activities at
the Site were discharged by the United States Bankruptcy Court's confirmation of
the Plan and that the confirmation of the Plan barred pre-confirmation claims
against the Company. Therefore, the Company declined to participate in
negotiations with the EPA and other PRPs during the 60-day period.
 
     On August 28, 1995, the Company filed a motion with the United States
Bankruptcy Court seeking an order to reopen its bankruptcy proceedings. The
Company's motion was granted August 29, 1995. The Company filed a complaint on
October 4, 1995 seeking a declaratory judgment from the Bankruptcy Court that
all environmental claims by the EPA or the DEQ related to the Company's
operations at the Site prior to the completion of its bankruptcy reorganization
were discharged by the Bankruptcy Court's confirmation of the Company's Plan.
 
   
     On November 13, 1995, both the EPA and the DEQ (the "Agencies") filed
answers to the Company's motion for declaratory judgment. Both the EPA and the
DEQ asserted defenses against the Company's claim including an assertion that
the Company did not provide appropriate notice of its bankruptcy proceeding,
that the bankruptcy proceeding cannot discharge an injunctive order for ongoing
pollution and that the environmental claims are not dischargeable because they
are post-confirmation claims. In addition to asking the court to allow its
environmental claims against the Company, the EPA also asked for a declaration
that the Company is required to amend its schedule of liabilities pursuant to
the bankruptcy or permit the EPA to file a late proof of claim. The Company, the
EPA and the DEQ have substantially completed discovery in this matter.
    
 
   
     In August 1995, the Company retained Environmental Strategies Corporation
("ESC"), an environmental consulting and engineering firm experienced in
conducting remedial investigations and feasibility studies and designing
remedial activities, to prepare an estimate of the cost of future Response
Activities at the Site. ESC delivered a report (the "ESC Report") that estimates
the cost of the Response Activities at the Site to be between $15.4 million and
$20.1 million over a 25-year period, not including the costs of Response
Activities already incurred by the EPA. The evaluation of the Site upon which
the ESC Report was based involved the review of all information available to the
Company with respect to the environmental condition at the Site, including
studies of the Site previously conducted by the EPA. ESC did not conduct any
physical evaluation or testing of soils or groundwater at the Site. ESC compared
reported levels of contamination at the Site to established clean-up criteria.
ESC then selected the remedial alternatives for soil and ground water
remediation which it believes will satisfy established clean-up criteria through
technology generally approved by the EPA at sites with similar contamination.
Although the Company believes that the ESC Report provides a reasonable estimate
of the cost of future Response Activities at the Site based on currently
available
    
 
                                       31
<PAGE>   33
 
information, no assurance can be given that a RI/FS would not reveal additional
information as to the nature or level of contaminants at the Site. Furthermore,
no assurance can be given that the EPA will agree with the remediation
alternatives assumed to be acceptable in the ESC Report, or that the actual cost
of the Response Activities at the Site will not materially exceed ESC's
estimates.
 
   
     In August 1996, the Bankruptcy Court ordered a temporary suspension in the
litigation to provide the parties the opportunity to pursue settlement options.
In September 1996, the Company entered into mediation with the Agencies in an
attempt to resolve the matter without incurring the substantial additional
expense of continuing the litigation. As a result of the mediation process, the
Company and the Agencies entered into an agreement in principle with respect to
a proposed settlement of the litigation (the "Settlement Agreement"). Under the
terms of the Settlement Agreement, the Company would pay the Agencies $1.0
million, and deposit an additional $2.3 million in an escrow account or trust
(the "Trust"), with the interest income on the Trust to be distributed to the
Agencies. A condition of the Settlement Agreement is that title to the portion
of the Site that is currently vacant (the "Property") be transferred to the
Agencies.
    
 
   
     The Settlement Agreement provides that the Agencies would complete
construction of the remedial action at the Property in accordance with their
standards and would have the right to sell the Property at any time during the
clean-up process. If the Property is sold by the Agencies during the clean-up
process, the $2.3 million held in the Trust would be returned to the Company.
Once the Property has been remediated as evidenced by completion of construction
of the remedial action and issuance of Remedial Action Reports or their
equivalents and the Property is usable for a "reasonable commercial or
industrial use", the Agencies would have the option to continue to market the
Property for one year. If the Property is not sold during this period, the
Company could elect to have the Property conveyed to it in exchange for the $2.3
million held in the Trust. If the Company takes ownership of the Property and
sells it within one year thereafter, fifty percent of any net proceeds in excess
of $2.3 million would have to be paid to the Agencies. The Agencies would
provide a "Prospective Purchaser Agreement" which would specify that any
prospective purchaser of the Property would not be liable for any past
environmental contamination or any ongoing remediation resulting from past
operations at the Site. If the Company elects not to take ownership of the
Property, the Agencies would retain the $2.3 million held in the Trust. If the
Agencies are unable to complete construction of the remedial action and clean up
soils so that the Property can be used for a reasonable commercial or industrial
use within ten years, they would be required to return the $2.3 million held in
the Trust to the Company.
    
 
   
     The Company and the Agencies have agreed to embody the terms of the
Settlement Agreement in a Consent Decree patterned after the EPA's National
Model for Consent Decrees. The Consent Decree would also contain covenants not
to sue, reservations of rights, and protection for the Company from claims for
contribution for environmental cleanup costs at the Site.
    
 
   
     The Settlement Agreement is conditioned upon the transfer of title to the
Property to the Agencies. The Property is owned by at least one other PRP, which
has not yet executed an agreement to transfer title to the Property to the
Agencies. Furthermore, although the Settlement Agreement reflects the material
terms of the proposed settlement agreed to by the Company and the Agencies, the
Settlement Agreement does not represent a final settlement of the litigation. A
final binding settlement of the litigation will be effected only through the
Bankruptcy Court's entry of a Consent Decree for the Site, which must be
prepared and agreed upon, and which is subject to public comment and the
approval of the United States Department of Justice, the EPA, the State of
Oregon and the Company's Board of Directors. No assurance can be given that the
Company and the Agencies will be able to reach agreement on a mutually
acceptable Consent Decree, that the terms of any such Consent Decree will be
substantially the same as those set forth in the Settlement Agreement or that
any such Consent Decree will be approved by all required parties.
    
 
   
     The Company believes that once the Property is available for a "reasonable
commercial or industrial use", it would have a value in excess of $2.3 million.
Consequently, the Company does not believe that the $2.3 million held in the
Trust is "impaired" under generally accepted accounting principles. Accordingly,
the Company has recorded the $1.0 million payment as an expense in the third
quarter of 1996 and will segregate the $2.3 million as a restricted asset on its
balance sheet when the Trust is established.
    
 
                                       32
<PAGE>   34
 
   
     The Company believes that any claims with respect to liability for the
costs of the Response Activities were discharged by the United States Bankruptcy
Court's confirmation of the Plan. The Company also believes that a settlement of
the litigation with the Agencies can be achieved on substantially the terms set
forth in the Settlement Agreement. However, no assurances can be given that the
Company and the Agencies will actually achieve a settlement or, if a settlement
is not achieved, that the Company will be successful in obtaining a judgment
from the Bankruptcy Court that the confirmation of the Plan discharged its
liability to the Agencies for environmental claims with respect to the Site or
that it will not ultimately be found to have liability with respect to the Site.
In the event that the Company and the Agencies are not able to achieve a
settlement and the bankruptcy defense is unsuccessful, the Company's ultimate
liability will depend on the total costs of the Response Activities and the
related costs and fees of the allocation process, the Company's relative
contribution of contaminants at the Site and the final allocation of costs to
the Company which may ultimately result in litigation and take several years to
determine. Based upon a preliminary estimate of the types of contaminants found
and the number of years each PRP owned or operated on the Site, the Company
believes that, if a settlement is not achieved and its bankruptcy defense is
unsuccessful, its liability for the costs of Response Activities and the costs
and fees of the allocation process would range from $4.0 million to $6.0 million
on an undiscounted basis. This range is primarily based on the length of time
the Company operated at the Site. The most contaminated portion of the Site was
operated as a coating facility for approximately 30 years. One of the other PRPs
operated at the coating facility for approximately 23 years, from 1955 to 1978.
The Company operated the coating facility from 1978 to 1985, or approximately
23% of the time the coating facility was in operation. Accordingly, the Company
has estimated its allocable share to be 20-25%. However, there is no assurance
that the Company will not ultimately bear liability with respect to such costs
disproportionate to the Company's operations at the site. If the Company is
ultimately found to have liability to the EPA or the DEQ with respect to the
Site, no assurance can be given that such liability would not have a material
adverse effect on the Company's business, financial condition and results of
operations.
    
 
   
LITIGATION
    
 
     In addition to the matters described above, from time to time, the Company
is involved in litigation relating to claims arising out of its operations in
the normal course of its business. The Company maintains insurance coverage
against potential claims in amounts which it believes to be adequate. Management
believes that it is not presently a party to any litigation, the outcome of
which would have a material adverse effect on the Company's business, financial
condition or results of operations.
 
                                       33
<PAGE>   35
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
     The following table sets forth certain information with respect to the
directors and executive officers of the Company.
 
<TABLE>
<CAPTION>
               NAME                  AGE            POSITION WITH THE COMPANY
- -----------------------------------  ---   --------------------------------------------
<S>                                  <C>   <C>
William R. Tagmyer.................  58    Chairman of the Board, President and Chief
                                           Executive Officer
Brian W. Dunham....................  38    Director, Executive Vice President and Chief
                                           Financial Officer, Treasurer and Secretary
Gary A. Stokes.....................  44    Vice President -- Sales and Marketing
Charles L. Koenig..................  54    President, Thompson Pipe and Steel,
                                           Vice President -- California Operations
Terrence R. Mitchell...............  41    Vice President and General
                                           Manager -- Tubular Products Division
Warren K. Kearns...................  67    Director
Wayne B. Kingsley..................  53    Director
Vern B. Ryles, Jr..................  58    Director
Neil R. Thornton...................  66    Director
</TABLE>
 
     William R. Tagmyer has been the Chairman of the Board of Directors,
President and Chief Executive Officer since 1986. From 1975 to 1986, he worked
for L. B. Foster Company, another steel pipe manufacturer. Prior to 1975, Mr.
Tagmyer was employed by the U.S. Steel Corporation and FMC Corporation in the
areas of sales, marketing, product management and contract administration.
 
     Brian W. Dunham has been a Director of the Company since August 1995. Mr.
Dunham has served as Vice President and Chief Financial Officer, Treasurer and
Secretary since 1990, and became Executive Vice President in 1995. From 1981 to
1990 he was employed by Coopers & Lybrand, independent accountants.
 
     Gary A. Stokes has been Vice President of Sales and Marketing since 1993.
From 1991 to 1993, Mr. Stokes was General Manager of the Company's Portland
Division. From 1990 to 1991, Mr. Stokes was Vice President, Sales for the
Company's Portland Division. Mr. Stokes was previously employed by L. B. Foster
Company for eleven years. He served as the Regional Manager responsible for L.B.
Foster Company's West Coast sales operations.
 
     Charles L. Koenig has been President, Thompson Pipe and Steel since June,
1996 and Vice President -- California Operations since 1993. From 1992 through
1993, Mr. Koenig served as the Company's Vice President of Manufacturing and is
a registered Professional Engineer. Prior to 1992, he was Operations Manager
with Thompson Pipe and Steel, where he was employed for more than twenty years.
 
     Terrence R. Mitchell was appointed Vice President and General
Manager -- Tubular Products Division in 1996. From 1993 to 1996, Mr. Mitchell
served as Vice President and General Manager -- Kansas Division. From 1985 to
1993, Mr. Mitchell was a Sales Manager for the Company. Prior to joining the
Company, he was employed by Valmont Industries, another pipe manufacturer.
 
     Warren K. Kearns has been a Director of the Company since 1986. Since 1985,
Mr. Kearns has been a Principal in Warren Kearns Associates, providing
consulting services to clients in steel and steel-related industries. Mr. Kearns
also serves as a Director for Erie Forge & Steel Company. Mr. Kearns was
formerly President and Director of L. B. Foster Company.
 
     Wayne B. Kingsley has been a Director of the Company since 1987. Mr.
Kingsley has been a General Partner of the General Partnership of InterVen II,
L.P. since 1985. Mr. Kingsley is Chairman of the Board of
 
                                       34
<PAGE>   36
 
Directors of American Waterways, Inc. and BIT, Inc. Mr. Kingsley is also a
director of Mobilworks, Inc. and Coleman Natural Products, Inc.
 
     Vern B. Ryles has been a Director of the Company since 1986. Mr. Ryles is
President and Chief Executive Officer of Poppers Supply, a manufacturer of
flavored popcorn snacks and distributor of snack foods and equipment. Mr. Ryles
is also a Director of the National Association of Concessionaires and a Director
of Electro Scientific Industries, a public company.
 
     Neil R. Thornton has been a Director of the Company since 1995. He was
previously a Director of the Company from 1986 to 1993. Mr. Thornton has been
the President and Chief Executive Officer of American Steel, L.L.C., a
distributor of carbon steel products, since 1985.
 
     The Company's directors are divided into three classes and, after a
transitional period, will serve for terms of three years, with one class being
elected by the stockholders each year. The terms of the current directors will
expire as follows: Messrs. Dunham and Kingsley in 1997, Messrs. Kearns and Ryles
in 1998 and Messrs. Tagmyer and Thornton in 1999. The Executive Committee,
comprised of Messrs. Kingsley, Ryles and Tagmyer, exercises the authority of the
Board of Directors between meetings of the Board, subject to certain
limitations. The Audit Committee, comprised of Messrs. Kearns and Thornton,
oversees actions taken by the Company's independent auditors and reviews the
Company's internal audit controls. The Compensation Committee, comprised of
Messrs. Kingsley and Ryles, reviews the compensation levels of the Company's
employees and makes recommendations to the Board regarding changes in
compensation. There are no family relationships between any of the directors or
executive officers of the Company.
 
     Article V of the Company's Restated Articles of Incorporation, provides
that the Company's directors may be removed only for cause, and only at a
meeting called expressly for that purpose by a vote of at least 75% of the votes
then entitled to be cast for the election of directors.
 
     Executive officers of the Company are appointed by the Board of Directors
and serve at the discretion of the Board.
 
DIRECTOR COMPENSATION
 
     The non-employee members of the Board of Directors are compensated for
their service on the Board. Non-employee members of the Board of Directors
receive a retainer of $2,500 per quarter plus $1,000 for each meeting attended
in person, $500 for each meeting attended by telephone and $500 for each
committee meeting attended either in person or by telephone. All members are
reimbursed for their travel expenses incurred in attending Board meetings. Total
compensation paid to the Board of Directors during the year ended December 31,
1995 was $16,000.
 
     The Company has adopted the 1995 Stock Option Plan for Nonemployee
Directors (the "1995 Nonemployee Director Plan"), which provides that an option
to purchase 5,000 shares of Common Stock is granted to each new nonemployee
director at the time such person is first elected or appointed to the Board of
Directors. In addition, each nonemployee director receives an option to purchase
2,000 shares of Common Stock annually after each annual meeting of shareholders.
The number of options which may be granted under the 1995 Nonemployee Director
Plan in any fiscal year may not exceed 20,000, subject to stock splits and
similar events, and a total of 100,000 shares of Common Stock have been reserved
for issuance upon exercise of stock options granted under the 1995 Nonemployee
Director Plan. On August 8, 1995, options to purchase 5,000 shares of Common
Stock were granted to Neil R. Thornton, under the 1995 Nonemployee Director
Plan. On May 14, 1996, Messrs. Kearns, Kingsley, Ryles and Thornton were each
granted options to purchase 2,000 shares of Common Stock under the Nonemployee
Director Plan.
 
                                       35
<PAGE>   37
 
EXECUTIVE COMPENSATION
 
     The following table provides certain summary information concerning
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer and each of the four other most highly compensated executive officers of
the Company determined as of the end of the last fiscal year (hereafter referred
to as the "named executive officers") for the fiscal years ended December 31,
1995 and 1994.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                         LONG TERM
                                                                        COMPENSATION
                                                                        ------------
                                                                         SECURITIES
                                                  ANNUAL COMPENSATION    UNDERLYING
                                                  -------------------     OPTIONS         ALL OTHER
       NAME AND PRINCIPAL POSITION         YEAR   SALARY($)  BONUS($)(1)  GRANTED(#)   COMPENSATION($)
- -----------------------------------------  ----   --------   --------   ------------   ---------------
<S>                                        <C>    <C>        <C>        <C>            <C>
William R. Tagmyer.......................  1995   $216,840   $165,000      25,470        $ 13,206(2)
  Chairman of the Board,                   1994    195,900     89,671          --          17,091(2)
  President and
  Chief Executive Officer
Brian W. Dunham..........................  1995    138,000    125,000      42,900           4,140(3)
  Director, Executive Vice                 1994    105,600     77,054      13,886           3,168(3)
  President, Chief Financial
  Officer, Secretary and
  Treasurer
Gary A. Stokes...........................  1995    104,400     83,000      17,160           3,148(3)
  Vice President --                        1994     92,400     43,353       6,358           2,656(3)
  Sales & Marketing
Charles L. Koenig........................  1995    106,020     83,000      17,160           3,211(4)
  President, Thompson Pipe and Steel,      1994    100,020     38,890       6,556          33,925(4)
  Vice President --
  California Operations
Terrence R. Mitchell.....................  1995     72,000     39,000      17,160           2,160(5)
  Vice President and
  General Manager --
  Tubular Products Division
</TABLE>
 
(1) Paid pursuant to the Company's discretionary bonus program, in which all
    salaried employees are eligible to participate.
(2) Represents $8,586 and $12,684 of Company-paid life insurance in 1995 and
    1994, respectively, and $4,620 and $4,407, of matching amounts contributed
    to the Company's 401(k) plan in 1995 and 1994, respectively.
(3) Represents matching amounts contributed to the Company's 401(k) plan in 1995
    and 1994.
(4) Represents $31,050 of relocation expenses in 1994 and $3,211 and $2,875 of
    matching amounts contributed to the Company's 401(k) plan in 1995 and 1994,
    respectively.
(5) Represents matching amounts contributed to the Company's 401(k) plan in
    1995. Amounts paid to Mr. Mitchell for salary and bonus did not exceed
    $100,000 in 1994.
 
OPTION GRANTS TABLE
 
     The following table sets forth information concerning options granted to
the named executive officers during the fiscal year ended December 31, 1995
under the Company's stock option plans.
 
                                       36
<PAGE>   38
 
                       OPTION GRANTS IN FISCAL YEAR 1995
 
<TABLE>
<CAPTION>
                                                                                              POTENTIAL
                                                                                             REALIZABLE
                                                                                          VALUE AT ASSUMED
                                                  PERCENT OF                               ANNUAL RATES OF
                                                 TOTAL OPTIONS                                  STOCK
                                                  GRANTED TO     EXERCISE                PRICE APPRECIATION
                                      OPTIONS      EMPLOYEES      PRICE     EXPIRATION   FOR OPTION TERM(2)
               NAME                  GRANTED(1)     IN 1995       ($/SH)       DATE         5%        10%
- -----------------------------------  ----------  -------------   --------   ----------   --------   --------
<S>                                  <C>         <C>             <C>        <C>          <C>        <C>
William R. Tagmyer.................    25,740         18%         $ 4.78      6/20/05    $200,415   $319,127
Brian W. Dunham....................    42,900         29%           4.78      6/20/05     334,024    531,878
Gary A. Stokes.....................    17,160         12%           4.78      6/20/05     133,610    212,751
Charles L. Koenig..................    17,160         12%           4.78      6/20/05     133,610    212,751
Terrence R. Mitchell...............    17,160         12%           4.78      6/20/05     133,610    212,751
</TABLE>
 
(1) All options were granted at a price of $4.78, vest over five years and have
    a ten year term.
(2) The potential realizable value is calculated based on the term of the option
    at its time of grant (10 years) and is calculated by assuming that the stock
    price on the date of grant (determined by the Board of Directors to have
    been $4.78 per share) appreciates at the indicated annual rate compounded
    annually for the entire term of the option and that the option is exercised
    and sold on the last day of its term for the appreciated price. Actual
    gains, if any, on stock option exercises are dependent on the future
    performance of the Common Stock and overall stock market conditions.
 
FISCAL YEAR END OPTION VALUES
 
     The following table sets forth, for each of the named executive officers,
the number and value of unexercised options as of December 31, 1995:
 
                         FISCAL YEAR END OPTION VALUES
 
<TABLE>
<CAPTION>
                                                    NUMBER OF UNEXERCISED           VALUE OF UNEXERCISED
                                                         OPTIONS AT                 IN-THE-MONEY OPTIONS
                                                      DECEMBER 31, 1995            AT DECEMBER 31, 1995(1)
                                                 ---------------------------     ---------------------------
                     NAME                        EXERCISABLE   UNEXERCISABLE     EXERCISABLE   UNEXERCISABLE
- -----------------------------------------------  -----------   -------------     -----------   -------------
<S>                                              <C>           <C>               <C>           <C>
William R. Tagmyer.............................      2,574         23,166         $  15,959      $ 143,629
Brian W. Dunham................................     41,897         38,610           404,320        239,382
Gary A. Stokes.................................     31,802         15,444           313,232         95,753
Charles L. Koenig..............................     16,851         15,444           161,652         95,753
Terrence R. Mitchell...........................      6,864         15,444            62,005         95,753
</TABLE>
 
(1) The value of unexercised in-the-money options is calculated based on the
    closing price of the Company's Common Stock on December 31, 1995, $10.98 per
    share. Amounts reflected are based on the assumed value minus the exercise
    price and do no necessarily indicate that the optionee sold such stock.
 
STOCK OPTION PLANS
 
     1995 STOCK INCENTIVE PLAN.  The Company's 1995 Stock Incentive Plan (the
"1995 Plan"), which was approved by the Board of Directors on June 20, 1995 and
approved by the Company's stockholders on August 8, 1995, provides for grants of
both "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and "non-qualified stock options"
which are not qualified for treatment under Section 422 of the Code, and for
direct stock grants and sales to employees or consultants of the Company. The
purposes of the 1995 Plan are to attract and retain the best available personnel
for positions of substantial responsibility, to provide additional incentives to
the employees and consultants of the Company and to promote the Company's
business. The 1995 Plan is administered by the Compensation Committee of the
Board of Directors.
 
     The term of each option granted under the 1995 Plan will be ten years from
the date of grant, or such shorter period as may be established at the time of
the grant. An option granted under the 1995 Plan may be exercised at such times
and under such conditions as determined by the Compensation Committee. If a
person who has been granted an option ceases to be an employee or consultant of
the Company, such person may
 
                                       37
<PAGE>   39
 
exercise that option only during the three month period after the date of
termination, and only to the extent that the option was exercisable on the date
of termination. If a person who has been granted an option ceases to be an
employee or consultant as a result of such person's total and permanent
disability, such person may exercise that option at any time within twelve
months after the date of termination, but only to the extent that the option was
exercisable on the date of termination. No option granted under the 1995 Plan is
transferable other than at death, and each option is exercisable during the life
of the optionee only by the optionee. In the event of the death of a person who
has received an option, the option generally may be exercised by a person who
acquired the option by bequest or inheritance during the twelve month period
after the date of death to the extent that such option was exercisable at the
date of death.
 
     The exercise price of options granted under the 1995 Plan may not be less
than the fair market value of a share of Common Stock on the last market trading
day prior to the date of grant of the option. The consideration to be paid upon
exercise of an option, including the method of payment, will be determined by
the Compensation Committee and may consist entirely of cash, check, shares of
Common Stock or any combination of such methods of payment as permitted by the
Compensation Committee.
 
     Certain options authorized to be granted under the 1995 Plan are intended
to qualify as incentive stock options for federal income tax purposes. Under
federal income tax law currently in effect, the optionee will recognize no
income upon grant or upon a proper exercise of an incentive stock option. If an
employee exercises an incentive stock option and does not dispose of any of the
option shares within two years following the date of grant and within one year
following the date of exercise, then any gain realized upon subsequent
disposition of the shares will be treated as income from the sale or exchange of
a capital asset. If an employee disposes of shares acquired upon exercise of an
incentive stock option before the expiration of either the one-year holding
period or the two-year waiting period, any amount realized will be taxable as
ordinary compensation income in the year of such disqualifying disposition to
the extent that the lesser of the fair market value of the shares on the
exercise date or the fair market value of the shares on the date of disposition
exceeds the exercise price. The Company will not be allowed any deduction for
federal income tax purposes at either the time of the grant or exercise of an
incentive stock option. Upon any disqualifying disposition by an employee, the
Company will be entitled to a deduction to the extent the employee realized
ordinary income, provided the Company properly reports to the taxing authorities
the ordinary income recognized by the optionee.
 
     Certain options authorized to be granted under the 1995 Plan will be
treated as non-qualified stock options for federal income tax purposes. Under
federal income tax law presently in effect, no income is realized by the grantee
of a non-qualified stock option pursuant to the 1995 Plan until the option is
exercised. At the time of exercise of a non-qualified stock option, the optionee
will realize ordinary compensation income, in the amount by which the market
value of the shares subject to the option at the time of exercise exceeds the
exercise price. The Company generally will be entitled to a deduction equal to
the ordinary income recognized by the optionee, provided the Company properly
reports to the taxing authorities the ordinary income recognized by the
optionee. Upon the sale of shares acquired upon exercise of a non-qualified
stock option, the excess of the amount realized from the sale over the market
value of the shares on the date of exercise will be taxable.
 
     The 1995 Plan will continue in effect until May 2005, unless earlier
terminated by the Board of Directors, but such termination will not affect the
terms of any options outstanding at that time. The Board of Directors may amend,
terminate or suspend the 1995 Plan at any time, provided that no amendment
regarding amount, price or timing of the grants may be made more than once every
six months other than to conform with changes in certain Securities Exchange Act
and Internal Revenue Code requirements. Amendments that would materially
increase the number of shares that may be issued, materially modify the
requirements as to eligibility for Plan participation, or materially increase
the benefits to Plan participants must be approved by the Company's
stockholders.
 
   
     At September 30, 1996 options to purchase 277,340 shares of Common Stock
were available for future grants pursuant to the 1995 Plan. During 1996, no
options have been granted under the 1995 Plan to the named executive officers.
    
 
                                       38
<PAGE>   40
 
     1995 STOCK OPTION PLAN FOR NONEMPLOYEE DIRECTORS.  Nonemployee members of
the Board of Directors participate in the Company's 1995 Stock Option Plan for
Nonemployee Directors (the "1995 Nonemployee Director Plan"), which was adopted
to promote the interests of the Company and its stockholders by strengthening
the Company's ability to attract and retain experienced and knowledgeable
nonemployee directors and to encourage them to acquire an increased proprietary
interest in the Company. Under the 1995 Nonemployee Director Plan, a 5,000 share
stock option is granted to each new nonemployee director at the time such person
is first elected or appointed to the Board of Directors. In addition, each
nonemployee director receives an option to purchase 2,000 shares of Common Stock
annually after each annual meeting of stockholders. Set forth below is a summary
of the material terms of the 1995 Nonemployee Director Plan.
 
     Each option expires ten years from the date of its grant. Outstanding
options will expire earlier if an optionee terminates service as a director
before the end of the ten year term. If an optionee terminates service as a
director for any reason other than retirement, total disability or death, the
option will automatically expire 90 days after the date of termination. If an
optionee dies or terminates service due to retirement or disability, the options
then outstanding will expire one year after the date of death or termination or
on the stated expiration date, whichever is earlier. Options are not assignable
during the lifetime of the optionee except by a qualified domestic relations
order.
 
     The exercise price of options granted under the 1995 Nonemployee Director
Plan may not be less than the fair market value of a share of Common Stock on
the date of grant of the option. Payment of the option exercise price may be in
cash or, to the extent permitted by the Compensation Committee, by delivery of
previously owned Common Stock having a fair market value equal to the option
exercise or a combination of cash and stock. The Compensation Committee may also
permit "cashless" option exercises by allowing optionees to surrender portions
of their options in payment for the stock to be received.
 
     All options granted under the 1995 Nonemployee Director Plan are
non-qualified -- not intended to qualify under Section 422 of the Code. No gain
will be recognized by the optionee at the time of a grant. Generally, at
exercise, ordinary income will be recognized by the optionee in an amount equal
to the difference between the option exercise price and the fair market value of
the shares on the date of exercise, and the Company will receive a tax deduction
for the same amount. At the time the optionee disposes of the shares, the
appreciation or depreciation of the shares since the option was exercised will
be treated as either a short or long term capital gain or loss, depending on how
long the shares have been held.
 
     The 1995 Nonemployee Director Plan continues in effect until terminated by
the Board of Directors or by stockholders but such termination will not affect
the terms of any options outstanding at that time. The Board of Directors may
amend, terminate or suspend the 1995 Nonemployee Director Plan at any time,
provided that no amendment regarding amount, price or timing of the grants may
be made more than once every six months other than to comport with changes in
certain Securities Exchange Act and Internal Revenue Code requirements.
Amendments that would materially increase the number of shares that may be
issued, materially modify the requirements as to eligibility of 1995 Nonemployee
Director Plan participation, or materially increase the benefits to participants
must be approved by stockholders.
 
   
     The number of options which may be granted under the 1995 Nonemployee
Director Plan in any fiscal year may not exceed 20,000, subject to stock splits
and similar events. A total of 100,000 shares of Common Stock have been reserved
for issuance upon exercise of stock options granted under the 1995 Nonemployee
Director Plan. Options that are forfeited or terminated will again be available
for grant. On May 14, 1996, options to purchase 8,000 shares of Common Stock
were granted to nonemployee directors. At September 30, 1996, 87,000 shares of
Common Stock were available for future grants pursuant to the 1995 Nonemployee
Director Plan.
    
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The Compensation Committee of the Board of Directors is comprised of
Messrs. Kingsley and Ryles. The Compensation Committee is responsible for
establishing the compensation of William R. Tagmyer, the Company's President and
Chief Executive Officer, who also serves on the Board of Directors. Mr. Tagmyer
is
 
                                       39
<PAGE>   41
 
responsible for reviewing the compensation levels of the Company's other
executive officers and makes recommendations to the Compensation Committee
regarding changes in compensation.
 
   
     On February 1, 1982, the Company entered into a Lease Agreement with
Multnomah Land & Equipment Company ("Multnomah Land"), a partnership in which
Vern B. Ryles, Jr., a director of the Company, is a general partner. The Lease
Agreement covers substantially all of the Company's Portland, Oregon facilities.
The term of this Lease Agreement ends December 1, 2008. The amounts paid by the
Company to Multnomah Land under this Lease equalled $357,000, $324,000, $344,000
and $258,000 for the years ended December 31, 1993, 1994 and 1995 and for the
nine months ended September 30, 1996, respectively. The Company believes that
the terms of its lease with Multnomah Land are no less favorable than could be
obtained from an unaffiliated third party. Additionally, the Company has an
option to acquire the property covered by this Lease, exercisable at any time
prior to the expiration of the Lease. The purchase price payable by the Company
upon exercise of this option would equal the greater of $1,000,000 or the
outstanding balance of the unpaid principal and accrued interest on the loan
secured by such property ($2.7 million at September 30, 1996). The Company and
Multnomah Land are co-makers on a Deed of Trust Note evidencing this loan.
    
 
     In 1994, the Company exercised its option to purchase equipment for
$600,000 which had been leased from Multnomah Land under an equipment lease. The
Company made payments under this lease to Multnomah Land of $386,000, $373,000
and $197,000 for 1992, 1993 and 1994, respectively.
 
     In addition, Multnomah Land has unconditionally guaranteed all of the
obligations of the Company to The CIT Group under the Financing Agreement dated
August 17, 1994. Multnomah Land's guarantee was required because it is a related
party with ownership rights to the Company's Portland, Oregon facilities.
 
     On April 29, 1994, the Company issued and sold Series C Convertible
Subordinated Debentures having an aggregate principal amount of $712,667 to
InterVen II, L.P. and InterVen Ventures 1987, entities which are controlled by
Wayne B. Kingsley, a director of the Company. The Company also issued and sold
$385,982 in principal amount of such Series C Debentures to Norwest Growth Fund,
Inc., an entity represented by George J. Still, Jr., a former director of the
Company. William Tagmyer, the Company's Chairman, President and Chief Executive
Officer purchased $168,000 in principal amount of Series C Debentures. These
transactions were ratified by a vote of the Company's stockholders on July 7,
1994.
 
   
     The Company paid Interven II, L.P. interest on Series A Subordinated
Debentures and Series B and Series C Convertible Subordinated Debentures in the
amount of $0, $36,317, $1,070,000 and $0 for the years ended December 31, 1993,
1994, 1995 and for the nine months ended September 30, 1996, respectively. The
Company paid Norwest Growth Fund, Inc. interest on such Debentures in the amount
of $0, $19,670, $603,000 and $0 in 1993, 1994 and 1995 and for the nine months
ended September 30, 1996, respectively. Interest on Series A Subordinated
Debentures and Series B Convertible Subordinated Debentures has been deferred
from time to time in accordance with the terms of the agreements that allow for
deferral based on the Company's operating cash flows. In December 1995, the
Company paid $1,046,000 and $590,000 in principal payments to InterVen II, L.P.
and Norwest Growth Fund, Inc., respectively, under the Series A Subordinated
Debentures to retire such Debentures. In November 1995, concurrent with the
Company's initial public offering of Common Stock, outstanding Series B and
Series C Convertible Subordinated Debentures were converted into shares of the
Common Stock.
    
 
                              CERTAIN TRANSACTIONS
 
     For a description of the transactions and relationships between the Company
and its officers, directors and other affiliates, see "Management -- 
Compensation Committee Interlocks and Insider Participation."
 
                                       40
<PAGE>   42
 
                       PRINCIPAL AND SELLING SHAREHOLDERS
 
   
     The table below sets forth certain information, as of September 30, 1996,
regarding the beneficial ownership of the Common Stock by: (i) each person known
by the Company to be the beneficial owner of 5% or more of its outstanding
Common Stock, (ii) each of the named executive officers, (iii) each of the
Company's directors, (iv) each of the Selling Shareholders and (v) all directors
and executive officers as a group:
    
 
   
<TABLE>
<CAPTION>
                                                SHARES BENEFICIALLY                  SHARES BENEFICIALLY
                                                  OWNED PRIOR TO                         OWNED AFTER
                                                    OFFERING(1)       SHARES TO BE      OFFERING(1)(2)
                                                -------------------     SOLD IN      --------------------
           NAME OF BENEFICIAL OWNER              NUMBER     PERCENT     OFFERING       NUMBER     PERCENT
- ----------------------------------------------  ---------   -------   ------------   ----------   -------
<S>                                             <C>         <C>       <C>            <C>          <C>
InterVen II, L.P. ............................  1,571,106     29.6%      677,986        893,120     13.7%
InterVen Ventures 1987
Wayne B. Kingsley(3)
1011 Swarthmore Avenue, Suite 5
Pacific Palisades, CA 90272
Norwest Growth Fund, Inc.(4)..................    618,708     11.7       350,000        268,708      4.1
3000 Sand Hill Road
Menlo Park, CA 94025
Poppers Supply Company........................     47,014        *        27,518         19,496        *
Vern B. Ryles, Jr.(5)
340 S.E. 7th Avenue
Portland, Oregon 97124
William R. Tagmyer............................    330,225      6.2        80,000        250,225      3.8
Brian W. Dunham...............................    101,606      1.9        15,000         86,606      1.3
Gary A. Stokes................................     74,854      1.4        15,000         59,854        *
Charles L. Koenig.............................     65,293      1.2        15,000         50,293        *
Terrence R. Mitchell..........................     10,010        *         2,000          8,010        *
Warren K. Kearns..............................     19,496        *        17,496          2,000        *
Neil R. Thornton..............................     16,377        *            --         16,377        *
All directors and executive officers as a
  group (nine persons)........................  2,235,981     40.9       850,000      1,385,981     20.8
</TABLE>
    
 
- ---------------
(*) Represents beneficial ownership of less than one percent of the outstanding
    Common Stock.
 
   
(1) Beneficial ownership is determined in accordance with the rules of the SEC,
    and includes voting power and investment power with respect to shares.
    Shares issuable upon the exercise of outstanding stock options that are
    currently exercisable or become exercisable within 60 days from September
    30, 1996 are considered outstanding for the purpose of calculating the
    percentage of Common Stock owned by such person but not for the purpose of
    calculating the percentage of Common Stock owned by any other person. The
    number of stock options that are exercisable within 60 days of September 30,
    1996 is as follows: Mr. Kearns -- 19,496; Mr. Kingsley -- 2,000; Mr.
    Ryles -- 11,994; Mr. Thornton -- 16,377; Mr. Tagmyer -- 7,293; Mr.
    Dunham -- 49,761; Mr. Stokes -- 34,946; Mr. Koenig -- 19,997; Mr.
    Mitchell -- 10,010; and all directors and officers as a group -- 171,874.
    
 
(2) Assumes no exercise of the Underwriter's over-allotment option, which grants
    the Underwriter's the option to purchase 191,292 shares of Common Stock from
    the Company and 168,708 shares from Norwest Growth Fund, Inc.
 
(3) Mr. Kingsley is a director of the Company and a General Partner of the
    General Partner of InterVen II, L.P., and Trustee of a General Partner of
    Interven Ventures 1987.
 
(4) All of the capital stock of Norwest Growth Fund, Inc. is beneficially owned
    by Norwest Limited, Inc. All of the capital stock of Norwest Limited, Inc.
    is beneficially owned by Norwest Corp., 1700 Norwest Center, Sixth and
    Marquette, Minneapolis, Minnesota 55479.
 
(5) Mr. Ryles is President and Chief Executive Officer of Poppers Supply Company
    and may be deemed to be the beneficial owner of the 27,518 shares of Common
    Stock beneficially owned by Poppers Supply Company.
 
                                       41
<PAGE>   43
 
                          DESCRIPTION OF CAPITAL STOCK
 
     The authorized capital stock of the Company consists of 15,000,000 shares
of Common Stock, par value $.01, and 10,000,000 shares of Preferred Stock, par
value $.01 per share. The following summary description of the Company's capital
stock does not purport to be complete and is qualified in its entirety by the
provisions of the Company's Articles of Incorporation and Bylaws.
 
COMMON STOCK
 
     After this offering 6,494,889 shares of Common Stock will be outstanding.
Holders of Common Stock are entitled to receive such dividends as may from time
to time be declared by the Board of Directors of the Company out of funds
legally available therefor. Holders of Common Stock are entitled to one vote per
share on all matters on which the holders of Common Stock are entitled to vote
and do not have any cumulative voting rights. Holders of Common Stock have no
preemptive, conversion, redemption or sinking fund rights. In the event of a
liquidation, dissolution or winding up of the Company, holders of Common Stock
are entitled to share equally and ratably in the assets of the Company, if any,
remaining after the payment of all debts and liabilities of the Company and the
liquidation preference of any outstanding class or series of Preferred Stock.
The outstanding shares of Common Stock are, and the shares of Common Stock
offered by the Company hereby when issued will be, fully paid and nonassessable.
The rights, preferences and privileges of holders of Common Stock are subject to
any series of Preferred Stock which the Company may issue in the future as
described below.
 
PREFERRED STOCK
 
     The Company is authorized to issue up to 10,000,000 shares of Preferred
Stock. The Board of Directors has the authority to issue Preferred Stock in one
or more series and to fix the number of shares constituting any such series, the
voting powers, designations, preferences and relative, participating, optional
or other special rights and qualifications, limitations or restrictions thereof,
including the dividend rights, dividend rate, terms of redemption, redemption
price or prices, conversion and voting rights and liquidation preferences of the
shares constituting any series, without any further vote or action by the
stockholders of the Company. The issuance of Preferred Stock by the Board of
Directors could adversely affect the rights of holders of Common Stock. For
example, issuance of Preferred Stock could result in a series of securities
outstanding that would have preference over the Common Stock with respect to
dividends and in liquidation and that could (upon conversion or otherwise) enjoy
all of the rights appurtenant to the Common Stock.
 
     The authority possessed by the Board of Directors to issue Preferred Stock
could potentially be used to discourage attempts by others to obtain control of
the Company through merger, tender offer, proxy or consent solicitation or
otherwise by making such attempts more difficult to achieve or more costly. The
Board of Directors may issue Preferred Stock without stockholder approval and
with voting rights that could adversely affect the voting power of holders of
Common Stock. There are no agreements or understandings for the issuance of
Preferred Stock, and the Board of Directors has no present intention of issuing
any shares of Preferred Stock.
 
OREGON CONTROL SHARE AND BUSINESS COMBINATION STATUTES; CERTAIN PROVISIONS OF
RESTATED ARTICLES
 
     The Company is subject to the Oregon Control Share Act (OBCA Sections
60.801-60.816) (the "Control Share Act"). The Control Share Act generally
provides that a person (the "Acquiring Person") who acquires voting stock of an
Oregon corporation in a transaction which results in such Acquiring Person
holding more than 20%, 33 1/3% or 50% of the total voting power of such
corporation (a "Control Share Acquisition") cannot vote the shares it acquires
in the Control Share Acquisition ("control shares") unless voting rights are
accorded to such control shares by the holders of a majority of the outstanding
voting shares, excluding the control shares held by the Acquiring Person and
shares held by the Company's officers and inside directors ("interested
shares"), and by the holders of a majority of the outstanding voting shares,
including interested shares. The foregoing vote would be required at the time an
Acquiring Person's holdings exceed 20% of the total voting power of a company,
and again at the time the Acquiring Person's holdings exceed 33 1/3% and 50%.
The term "Acquiring Person" is broadly defined to include persons acting as a
group. A transaction in which voting power is acquired solely by receipt of an
immediately revocable proxy does not constitute a "Control Share Acquisition."
 
                                       42
<PAGE>   44
 
     The Acquiring Person may, but is not required to, submit to the Company an
"Acquiring Person Statement" setting forth certain information about the
Acquiring Person and its plans for acquiring the Company's stock. The Acquiring
Person Statement may also request that the Company call a special meeting of
stockholders to determine whether the control shares will be allowed to retain
voting rights. If the Acquiring Person does not request a special meeting of
stockholders, the issue of voting rights of control shares will be considered at
the next annual meeting or special meeting of stockholders that is held more
than 60 days after the date of the Control Share Acquisition. If the Acquiring
Person's control shares are accorded voting rights and represent a majority or
more of all voting power, stockholders who do not vote in favor of the
restoration of such voting rights will have the right to receive the appraised
"fair value" of their shares, which may not be less than the highest price paid
per share by the Acquiring Person for the control shares.
 
     The Company is also subject to the Oregon Business Combination Act (OBCA
Sections 60.825-60.845) (the "Business Combination Act"). The Business
Combination Act generally provides that in the event a person or entity acquires
15% or more of the voting stock of an Oregon corporation (an "Interested
Stockholder"), the corporation and the Interested Stockholder, or any affiliated
entity, may not engage in certain business combination transactions for a period
of three years following the date the person became an Interested Stockholder.
Business combination transactions for this purpose include (a) a merger or plan
of share exchange, (b) any sale, lease, mortgage or other disposition of the
assets of the corporation where the assets have an aggregate market value equal
to 10% or more of the aggregate market value of the corporation's assets or
outstanding capital stock and (c) certain transactions that result in the
issuance of capital stock of the corporation to the Interested Stockholder.
These restrictions do not apply if (i) the Interested Stockholder, as a result
of the transaction in which such person became an Interested Stockholder, owns
at least 85% of the outstanding voting stock of the corporation (disregarding
shares owned by directors who are also officers, and certain employee benefit
plans), (ii) the Board of Directors approves the share acquisition or business
combination before the Interested Stockholder acquired 15% or more of the
corporation's voting stock, or (iii) the Board of Directors and the holders of
at least two-thirds of the outstanding voting stock of the corporation
(disregarding shares owned by the Interested Stockholder) approve the
transaction after the Interested Stockholder acquires 15% or more of the
corporation's voting stock. The Control Share Act and the Business Combination
Act will have the effect of encouraging any potential acquiror to negotiate with
the Company's Board of Directors and will also discourage certain potential
acquirors unwilling to comply with its provisions.
 
     The Company's Articles and Bylaws contain provisions which (i) classify the
Board of Directors into three classes as nearly equal in number as possible,
each of which, after an interim arrangement, will serve for three years with one
class being elected each year (the "Classified Board Provisions"), (ii) provide
that directors may be removed by stockholders only for cause and only upon the
vote of 75% of the votes then entitled to be cast for the election of directors,
(iii) require the approval of holders of 67% of the outstanding shares of the
Company entitled to vote to effect a merger or consolidation of the Company, the
sale, lease or exchange of all or substantially all of the assets of the Company
or the liquidation or dissolution of the Company and (iv) permit the Board of
Directors to issue Preferred Stock in one or more series and to fix the number
of shares constituting any such series, the voting powers and all other rights
and preferences of any such series, without any further vote or action by the
shareholders of the Company. These provisions may have the effect of lengthening
the time required for a person to acquire control of the Company through a proxy
contest or the election of a majority of the Board of Directors and may deter
any potential unfriendly offers or other efforts to obtain control of the
Company. This could deprive the Company's stockholders of opportunities to
realize a premium for their Common Stock and could make removal of incumbent
directors more difficult. At the same time, these provisions may have the effect
of inducing any persons seeking control of the Company to negotiate terms
acceptable to the Board of Directors. In addition, the provisions of the
Articles regarding removal of directors will make the removal of any director
more difficult even if such removal is believed by the stockholders to be in
their best interests. Since these provisions make the removal of directors more
difficult, they increase the likelihood that incumbent directors will retain
their positions and, since the Board has the power to retain and discharge
management, could perpetuate incumbent management.
 
TRANSFER AGENT
 
     The transfer agent and registrar for the Common Stock is Chase Mellon
Shareholder Services.
 
                                       43
<PAGE>   45
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Future sales of substantial amounts of Common Stock in the public market
could adversely affect prevailing market prices. Upon completion of this
offering, the Company will have outstanding 6,494,889 shares of Common Stock
(6,686,181 shares if the over-allotment option is exercised in full). The
Company and the officers, directors and certain other stockholders of the
Company have agreed, subject to certain exceptions, not to sell or otherwise
dispose of any Common Stock for a period of 90 days from the date of this
Prospectus without the prior written consent of the Representatives of the
Underwriters. Approximately 1,382,815 of the shares of Common Stock outstanding
upon completion of the Offering (1,214,107 shares if the over-allotment option
is exercised in full) will be subject to the resale restrictions imposed by
these agreements, and thereafter will be eligible for resale pursuant to Rule
144 under the Act.
 
     In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least two years (including any period of ownership of preceding
nonaffiliated holders) would generally be entitled to sell, within any three
month period, a number of shares that does not exceed the greater of (i) 1% of
the then-outstanding shares of Common Stock of the Company, or (ii) the average
weekly trading volume of the then-outstanding shares of Common Stock during the
four calendar weeks preceding each such sale. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the Company. A person (or
persons whose shares are aggregated) who is not deemed an "affiliate" of the
Company and who has beneficially owned shares for at least three years
(including any period of ownership of preceding nonaffiliated holders) would be
entitled to sell such shares under Rule 144 without regard to the volume
limitations described above.
 
     Holders of approximately 1,300,000 shares of Common Stock are entitled to
certain registration rights. Such rights provide that if the Company proposes to
register any of its securities under the Act, whether for its own account or
otherwise, such holders, or their permitted assigns, are entitled to notice of
the registration and inclusion of such shares therein, subject to certain
limitations. In addition, upon expiration or waiver of the lockup period
described above, such holders may require the Company to file a registration
statement covering such shares, and the Company is obligated to use its best
efforts to effect such registration, subject to certain conditions and
limitations. The Company is obligated to effect only two such demand
registrations, which must be at least six months apart. Further, if the Company
is eligible to register its securities on Form S-3, such holders may require the
Company to file a registration statement on Form S-3 covering such shares, and
the Company is obligated to use its best efforts to effect such registration,
subject to certain conditions and limitations. Registrations on Form S-3 are not
counted for purposes of the two demand registration limitation. All expenses,
other than underwriting discounts and commissions, incurred in connection with a
demand or Form S-3 registration, including all registration, filing,
qualification, printing and accounting fees, and the reasonable fees and
disbursements of counsel for the selling stockholders and counsel for the
Company are required to be paid by the Company. With respect to any registration
effected pursuant to the registration rights of such holders, the Company is
required to indemnify such holders against certain liabilities, including
liabilities under the Act.
 
   
     The Company has reserved 665,311 shares of Common Stock for issuance
pursuant to the Company's stock option plans. Of this amount, 301,309 shares
were subject to outstanding options at September 30, 1996. See
"Management -- Stock Option Plans." The Company intends to file a registration
statement under the Act to register shares of Common Stock issuable upon
exercise of options granted pursuant to the Company's stock option plans. Such
registration statement is expected to be filed promptly after the date of this
Prospectus and will become effective automatically upon filing. Common Stock
issued after the effective date of such registration statement upon exercise of
stock options granted under the stock option plans will generally be eligible
for resale in the open market.
    
 
                                       44
<PAGE>   46
 
                                  UNDERWRITING
 
     Under the terms and subject to the conditions contained in the Underwriting
Agreement, the underwriters of this offering (the "Underwriters"), for whom
Hanifen, Imhoff Inc., Stephens Inc. and Jensen Securities Co. are acting as
representatives (the "Representatives"), have severally agreed to purchase the
aggregate number of shares of Common Stock set forth opposite their respective
names below:
 
<TABLE>
<CAPTION>
                                UNDERWRITERS                               NUMBER OF SHARES
    ---------------------------------------------------------------------  ----------------
    <S>                                                                    <C>
    Hanifen, Imhoff Inc. ................................................
    Stephens Inc. .......................................................
    Jensen Securities Co. ...............................................
                                                                             -----------
              Total......................................................      2,400,000
                                                                             ===========
</TABLE>
 
     The Underwriting Agreement provides that the obligations of the
Underwriters to purchase shares of Common Stock are subject to the approval of
certain legal matters by counsel and to certain conditions and that, if any
shares of Common Stock are purchased by the Underwriters pursuant to the
Underwriting Agreement, all the shares of Common Stock agreed to be purchased by
the Underwriters must be so purchased.
 
     The Company has been advised that the Underwriters propose to offer the
shares of Common Stock offered hereby to the public initially at the public
offering price set forth on the cover page of this Prospectus and to certain
selected dealers (who may include the Underwriters) at such public offering
price less a concession not to exceed $          per share. The Underwriters or
such selected dealers may reallow a commission to certain other dealers not to
exceed $          per share. After the public offering, the public offering
price, the concession to selected dealers and the reallowance of other dealers
may be changed by the Representatives. The Representatives have advised the
Company that they do not expect the Underwriters to make sales to accounts over
which any Underwriter exercises discretionary authority.
 
     The Company and one of the Selling Shareholders have granted to the
Underwriters an option to purchase up to an aggregate of 360,000 additional
shares of Common Stock at the public offering price less the aggregate
underwriting discount, solely to cover over-allotments. The option may be
exercised at any time up to 30 days after the date of this Prospectus. To the
extent that the Underwriters exercise such option, each such Underwriter will be
committed, subject to certain conditions, to purchase a number of option shares
proportionate to such Underwriter's initial commitment.
 
     The Company, its directors and executive officers and certain stockholders
of the Company have agreed that they will not offer to sell, sell or otherwise
dispose of any shares of Common Stock not sold in this offering for a period of
90 days from the date of the Prospectus without the prior written consent of
Hanifen, Imhoff Inc., on behalf of the Underwriters.
 
     The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments the Underwriters may be required to make in respect thereof.
 
     In connection with this offering, certain Underwriters and selling group
members (if any) or their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in passive market making
transactions in the Common Stock on the Nasdaq National Market in accordance
with Rule 10b-6A under the Securities Exchange Act of 1934 during the two
business day period before commencement of offers or sales of Common Stock. The
passive market making transactions must comply with applicable price and volume
limits and be identified as such. In general, a passive market maker may display
its bid at a price not in excess of the highest independent bid for the
security; if all independent bids are lowered below the passive market maker's
bid, however, such bid must then be lowered when certain purchase limits are
exceeded. Net purchases by a passive market maker on each day are generally
limited to a specified percentage of the passive market making average daily
trading volume in the Common Stock during a price period and must be
discontinued when such limit is reached. Passive market making may stabilize the
market price of the Common Stock at a level above that which might otherwise
prevail and, if commenced, may be discontinued at any time.
 
                                       45
<PAGE>   47
 
                                 LEGAL MATTERS
 
     The validity of the Common Stock being offered hereby will be passed upon
for the Company by Ater Wynne Hewitt Dodson & Skerritt, LLP, Portland, Oregon.
Certain matters will be passed upon for the Underwriters by Gibson, Dunn &
Crutcher LLP, Denver, Colorado.
 
                                    EXPERTS
 
     The financial statements of the Company as of December 31, 1995 and 1994
and for each of the three years in the period ended December 31, 1995, included
in this Prospectus, and the related financial statement schedule included
elsewhere in the Registration Statement have been included herein in reliance on
the reports, which include an emphasis of matter concerning a claim by the
United States Environmental Protection Agency and an explanatory paragraph
concerning a change in method of accounting for income taxes in 1993, of Coopers
& Lybrand L.L.P., Independent Accountants, given on the authority of that firm
as experts in accounting and auditing.
 
     The financial statements of Thompson Pipe and Steel Company as of December
31, 1995 and 1994 and for each of the three years in the period ended December
31, 1995, included in the Prospectus, have been included herein in reliance on
reports of Coopers & Lybrand L.L.P., Independent Accountants, given on the
authority of that firm as experts in accounting and auditing.
 
                             ADDITIONAL INFORMATION
 
     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at certain of its regional offices located at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common
Stock of the Company is quoted on the Nasdaq National Market. Reports and other
information concerning the Company may be inspected at the National Association
of Securities Dealers, Inc., 1735 K Street, Washington, D.C. The Commission also
maintains a site on the World Wide Web that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov.
 
   
     This Prospectus constitutes a part of a Registration Statement on Form S-1
filed by the Company with the Commission under the Securities Act with respect
to the Common Stock offered hereby. This Prospectus omits certain of the
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and related exhibits and schedules for
further information with respect to the Company and the Common Stock offered
hereby. Any statements contained herein concerning the provisions of any
document are not necessarily complete, and in each such instance reference is
made to the copy of such document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by such reference.
The Registration Statement and the exhibits and schedules forming a part thereof
can be inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and should also be available for inspection and copying at the
following regional offices of the Commission: Seven World Trade Center, 13th
Floor, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Statements contained in this Prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.
    
 
                                       46
<PAGE>   48
 
                         INDEX TO FINANCIAL STATEMENTS
 
   
<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
NORTHWEST PIPE COMPANY
Report of Independent Accountants.....................................................   F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995 and September 30, 1996
  (unaudited).........................................................................   F-3
Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and 1995
  and for the Nine Months Ended September 30, 1995 and 1996 (unaudited)...............   F-4
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended
  December 31, 1993, 1994 and 1995 and for the Nine Months Ended September 30, 1996
  (unaudited).........................................................................   F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and
  1995 and for the Nine Months Ended September 30, 1995 and 1996 (unaudited)..........   F-6
Notes to Consolidated Financial Statements............................................   F-7
THOMPSON PIPE AND STEEL COMPANY
Report of Independent Accountants.....................................................  F-21
Consolidated Balance Sheets as of May 31, 1996 (unaudited) and December 31, 1995 and
  1994................................................................................  F-22
Consolidated Statements of Operations for the Five Months Ended May 31, 1996 and 1995
  (unaudited) and the Years Ended December 31, 1995, 1994 and 1993....................  F-23
Consolidated Statements of Cash Flows for the Five Months Ended May 31, 1996 and 1995
  (unaudited) and the Years Ended December 31, 1995, 1994 and 1993....................  F-24
Notes to Consolidated Financial Statements............................................  F-25
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
Pro Forma Combined Statements of Operations...........................................  F-36
Pro Forma Combined Statement of Operations for the Nine Months Ended September 30,
  1996................................................................................  F-37
Pro Forma Combined Statement of Operations for the Year Ended December 31, 1995.......  F-38
Footnotes to Pro Forma Combined Financial Statements..................................  F-39
</TABLE>
    
 
                                       F-1
<PAGE>   49
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Shareholders and Board of Directors
Northwest Pipe Company
 
     We have audited the accompanying balance sheets of Northwest Pipe Company
as of December 31, 1995 and 1994, and the related statements of income, changes
in stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
   
     As discussed in Note 12 of Notes to Consolidated Financial Statements, the
Company, along with three other parties, has been named as a potentially
responsible party by the United States Environmental Protection Agency (the
"Agency") for a "Superfund" site (the "Site") located in Clackamas, Oregon. The
Company has entered into an agreement in principle with the Agency and the
Oregon Department of Environmental Quality with respect to a proposed settlement
of litigation relating to the Company's potential liability for the costs of
response actions at the Site.
    
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Northwest Pipe Company as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles.
 
     As discussed in Note 14 of Notes to Consolidated Financial Statements,
effective January 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
 


                                          /s/ COOPERS & LYBRAND L.L.P.
                                          COOPERS & LYBRAND L.L.P.
 
Portland, Oregon
   
February 13, 1996, except for
    
   
Note 12, for which the
    
   
date is October 15, 1996
    
 
                                       F-2
<PAGE>   50
                             NORTHWEST PIPE COMPANY
 
                          CONSOLIDATED BALANCE SHEETS
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
   
<TABLE> 
<CAPTION>                                                                                                    
                                                                          DECEMBER 31,          SEPTEMBER    
                                                                     -----------------------       30,       
                                                                        1994         1995         1996       
                                                                     ----------   ----------   -----------   
                                                                                               (UNAUDITED)   
<S>                                                                  <C>          <C>          <C>
ASSETS
Current assets:
  Cash.............................................................   $    395     $    857     $   4,308
  Trade receivables, less allowance for doubtful accounts of $571,
     $867 and $920 in 1994, 1995 and 1996, respectively............     13,651       15,984        36,867
  Costs and estimated earnings in excess of billings on uncompleted
     contracts.....................................................      2,812        9,891         9,324
  Inventories......................................................     13,745       11,409        15,664
  Prepaid expenses and other.......................................      1,115          835           425
  Deferred income taxes............................................      1,414          694         1,175
                                                                      --------     --------     ---------
          Total current assets.....................................     33,132       39,670        67,763
Property and equipment.............................................     19,943       21,198        30,626
Property under capital leases, less accumulated amortization of
  $452, $513 and $561 in 1994, 1995 and 1996, respectively.........      2,938        2,939         2,891
Other assets.......................................................        795          647         1,048
                                                                      --------     --------     ---------
                                                                      $ 56,808     $ 64,454     $ 102,328
                                                                      ========     ========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Note payable to financial institution............................   $ 10,319     $  2,191     $  24,743
  Current portion of long-term debt................................      2,986        2,100         2,590
  Current portion of capital lease obligations.....................         66          106           305
  Current portion of capital lease obligations due to related
     party.........................................................        107          115           122
  Accounts payable.................................................      7,685        9,733         9,136
  Accrued liabilities..............................................      2,025        2,987         8,404
                                                                      --------     --------     ---------
          Total current liabilities................................     23,188       17,232        45,300
Long-term debt, less current portion...............................     12,810        9,110        10,173
Long-term debt due to related parties..............................      5,078
Capital lease obligations, less current portion....................        325          259         1,815
Capital lease obligations due to related party.....................      2,785        2,671         2,548
Other long-term liabilities........................................                                   680
Deferred income taxes..............................................      1,103        1,453
                                                                      --------     --------     ---------
          Total liabilities........................................     45,289       30,725        60,516
                                                                      --------     --------     ---------
Commitments and contingencies (Notes 8 and 12)
Stockholders' Equity:
  Preferred stock, $.01 par value, 10,000,000 shares authorized,
     none issued or outstanding....................................
  Class A common stock, $.01 par value, 600,000 shares authorized,
     448,394 shares issued and outstanding at December 31, 1994....          5
  Class B common stock, $.01 par value, 2,500,000 shares
     authorized, 248,609 shares issued and outstanding at December
     31, 1994......................................................          3
  Common stock, $.01 par value, 15,000,000 shares authorized,
     5,258,299 and 5,294,889 shares issued and outstanding at
     December 31, 1995 and September 30, 1996, respectively........                      53            53
  Additional paid-in capital.......................................      5,845       22,903        22,940
  Retained earnings after December 31, 1986 quasi-reorganization...      5,666       10,773        18,819
                                                                      --------     --------     ---------
          Total stockholders' equity...............................     11,519       33,729        41,812
                                                                      --------     --------     ---------
                                                                      $ 56,808     $ 64,454     $ 102,328
                                                                      ========     ========     =========

</TABLE> 
    
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
 
                                       F-3
<PAGE>   51
 
                             NORTHWEST PIPE COMPANY
 
                       CONSOLIDATED STATEMENTS OF INCOME
     (DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
 
   
<TABLE>
<CAPTION>
                                                                              
                                                                                  NINE MONTHS
                                              YEAR ENDED DECEMBER 31,         ENDED SEPTEMBER 30,
                                          -------------------------------     --------------------
                                           1993        1994        1995        1995         1996
                                          -------     -------     -------     -------     --------
                                                                                  (UNAUDITED)
<S>                                       <C>         <C>         <C>         <C>         <C>
Net sales...............................  $54,437     $73,641     $97,715     $71,927     $102,449
Cost of sales...........................   47,908      61,661      78,139      58,283       79,214
                                          -------     -------     -------     -------     --------
  Gross profit..........................    6,529      11,980      19,576      13,644       23,235
Selling, general and administrative
  expenses..............................    5,369       5,719       7,798       5,427        8,229
                                          -------     -------     -------     -------     --------
Operating income........................    1,160       6,261      11,778       8,217       15,006
Interest expense........................    1,660       2,265       2,839       2,085        1,424
Interest expense to related parties.....      407         543         609         541          173
                                          -------     -------     -------     -------     --------
Income (loss) before income taxes.......     (907)      3,453       8,330       5,591       13,409
Provision (benefit) for income taxes....     (333)      1,292       3,223       2,099        5,363
                                          -------     -------     -------     -------     --------
Income (loss) before cumulative effect
  of accounting change..................     (574)      2,161       5,107       3,492        8,046
Cumulative effect of accounting change
  (Note 14).............................      837
                                          -------     -------     -------     -------     --------
          Net income....................  $   263     $ 2,161     $ 5,107     $ 3,492     $  8,046
                                          =======     =======     =======     =======     ========
Net income per share....................  $  0.16     $  0.65     $  1.43     $  1.03     $   1.45
                                          =======     =======     =======     =======     ========
Weighted average number of shares
  outstanding...........................    1,951       3,526       3,695       3,551        5,537
                                          =======     =======     =======     =======     ========
</TABLE>
    
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
 
                                       F-4
<PAGE>   52
 
                             NORTHWEST PIPE COMPANY
 
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
   
<TABLE>
<CAPTION>
                                                         COMMON STOCK
                                     -----------------------------------------------------
                                         CLASS A           CLASS B                          ADDITIONAL                  TOTAL
                                     ----------------  ----------------                      PAID-IN     RETAINED   STOCKHOLDERS'
                                      SHARES   AMOUNT   SHARES   AMOUNT   SHARES    AMOUNT   CAPITAL    EARNINGS*      EQUITY
                                     --------  ------  --------  ------  ---------  ------  ----------  ----------  -------------
<S>                                  <C>       <C>     <C>       <C>     <C>        <C>     <C>         <C>         <C>
Balance at December 31, 1992.......   448,394    $ 5    248,609   $  3                        $ 5,615     $ 3,242      $ 8,865
  Net income.......................                                                                           263          263
  Tax benefit of net operating loss
    carryforwards generated prior
    to quasi-reorganization........                                                               230                      230
                                     --------    ---   --------   ----   ---------    ---     -------     -------      -------
Balance at December 31, 1993.......   448,394      5    248,609      3                          5,845       3,505        9,358
  Net income.......................                                                                         2,161        2,161
                                     --------    ---   --------   ----   ---------    ---     -------     -------      -------
Balance at December 31, 1994.......   448,394      5    248,609      3                          5,845       5,666       11,519
  Net income.......................                                                                         5,107        5,107
  Conversion of Class A to
    common stock...................  (448,394)    (5)                      448,394    $ 5
  Conversion of Class B to
    common stock...................                    (248,609)    (3)    248,609      3
  Conversion of Series B and
    Series C Subordinated debt
    to common stock................                                      2,629,296     26       2,464                    2,490
  Proceeds from sale of
    common stock net of
    issuance cost of $1,558........                                      1,932,000     19      14,594                   14,613
                                     --------    ---   --------   ----   ---------    ---     -------     -------      -------
Balance at December 31, 1995.......                                      5,258,299     53      22,903      10,773       33,729
  Issuance of Common Stock
    (unaudited)....................                                         36,590                 37                       37
  Net income (unaudited)...........                                                                         8,046        8,046
                                     --------    ---   --------   ----   ---------    ---     -------     -------      -------
Balance at September 30, 1996
  (unaudited)......................              $--              $ --   5,294,889    $53     $22,940     $18,819      $41,812
                                     ========    ===   ========   ====   =========    ===     =======     =======      =======
</TABLE>
    
 
- ---------------
* After December 31, 1986 quasi-reorganization
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
 
                                       F-5
<PAGE>   53
 
                             NORTHWEST PIPE COMPANY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
   
<TABLE>
<CAPTION>
                                                                                                        NINE MONTHS
                                                                                                           ENDED
                                                                    YEAR ENDED DECEMBER 31,            SEPTEMBER 30,
                                                                -------------------------------     -------------------
                                                                 1993        1994        1995        1995        1996
                                                                -------     -------     -------     -------     -------
                                                                                                        (UNAUDITED)
<S>                                                             <C>         <C>         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income..................................................  $   263     $ 2,161     $ 5,107     $ 3,492     $ 8,046
  Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
    Cumulative effect of change in method of accounting for
      income taxes............................................     (837)
    Depreciation and amortization.............................    1,170       1,302       1,362         982       1,372
    Provision for (recovery on) doubtful accounts.............     (286)         35         296         274          53
    Deferred income taxes.....................................     (333)      1,089       1,070         753
  Changes in assets and liabilities, net of effects from
    purchase of Thompson Pipe and Steel:
    Trade receivables.........................................    2,297      (5,480)     (2,629)     (4,295)    (13,902)
    Costs and estimated earnings in excess of billings on
      uncompleted contracts...................................      958         317      (7,079)     (6,019)      2,457
    Inventories...............................................   (1,362)     (5,540)      2,336       4,019      (2,416)
    Prepaid expenses and other................................     (241)         83         280         296         428
    Accounts payable..........................................   (2,380)      4,059       2,048         (88)     (3,655)
    Accrued liabilities.......................................      255       1,099         962       1,744         (47)
                                                                -------     -------     -------     -------     -------
         Net cash provided by (used in) operating
           activities.........................................     (496)       (875)      3,753       1,158      (7,664)
                                                                -------     -------     -------     -------     -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Additions to property and equipment.........................   (4,217)     (1,667)     (2,556)     (1,591)     (2,670)
  Acquisition, net of cash acquired...........................                                                   (3,073)
  Other assets................................................                 (358)        148        (153)       (313)
                                                                -------     -------     -------     -------     -------
         Net cash used in investing activities................   (4,217)     (2,025)     (2,408)     (1,744)     (6,056)
                                                                -------     -------     -------     -------     -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from long-term debt................................    2,884      10,598
  Proceeds from long-term debt due to related parties.........                1,402
  Proceeds from sale of common stock..........................                           14,613                      39
  Payments on long-term debt..................................   (1,496)     (6,206)     (7,174)     (2,555)     (1,427)
  Net proceeds (payments) under note payable to financial
    institution...............................................    3,595      (1,671)     (8,128)      3,722      19,286
  Payments on capital lease obligations.......................                  (41)        (88)        (63)       (642)
  Payments on capital lease obligations to related party......     (344)       (807)       (106)        (79)        (85)
                                                                -------     -------     -------     -------     -------
         Net cash provided by (used in) financing
           activities.........................................    4,639       3,275        (883)      1,025      17,171
                                                                -------     -------     -------     -------     -------
Net increase (decrease) in cash...............................      (74)        375         462         439       3,451
Cash, beginning of period.....................................       94          20         395         395         857
                                                                -------     -------     -------     -------     -------
Cash, end of period...........................................  $    20     $   395     $   857     $   834     $ 4,308
                                                                =======     =======     =======     =======     =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid during the year for:
    Interest..................................................  $ 2,003     $ 2,096     $ 4,009     $ 2,345     $ 1,460
                                                                =======     =======     =======     =======     =======
    Income taxes..............................................  $    15     $   138     $ 1,274     $ 1,044     $ 5,771
                                                                =======     =======     =======     =======     =======
SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION:
  Accrued interest converted to long-term debt................  $   414     $   264                 $    28
  Long-term debt converted to common stock....................                          $ 2,490
  Capital lease obligations incurred..........................                  432          62          41
  Acquisition:
    Fair value of assets acquired.............................                                                  $20,886
    Fair value of liabilities assumed.........................                                                   17,813
                                                                                                                -------
         Cash paid, net.......................................                                                  $ 3,073
                                                                                                                =======
</TABLE>
    
 
  The accompanying notes are an integral part of these consolidated financial
                                   statements
 
                                       F-6
<PAGE>   54
 
                             NORTHWEST PIPE COMPANY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   
               (INFORMATION AS OF SEPTEMBER 30, 1996 AND FOR THE
    
   
       NINE MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 IS UNAUDITED)
    
 
          (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
     For 1993, the financial statements include the accounts of Northwest Pipe
Company and its wholly-owned subsidiaries (the Company) after elimination of
intercompany balances and transactions. In 1994, the Company merged its two
subsidiaries into Northwest Pipe Company. The Company manufactures steel pipe in
two business segments at plants located in Portland, Oregon; Denver, Colorado;
Adelanto, California; and Atchison, Kansas.
 
USE OF ESTIMATES
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
SEGMENTS
 
     Water Transmission products are custom manufactured in accordance with
project specifications. These products are used primarily for high pressure
water transmission pipelines in the United States and Canada. Water Transmission
products are manufactured in Portland, Oregon, Denver, Colorado, and Adelanto,
California and are sold primarily to public water agencies either directly or
through an installation contractor.
 
     Tubular Products are manufactured in the Company's Portland, Oregon and
Atchison, Kansas facilities. Tubular Products are marketed through a network of
direct sales force personnel and independent distributors throughout the United
States and Canada. These products are used for a variety of construction,
agricultural and industrial purposes.
 
CASH
 
     Cash consists of cash on hand, cash in banks and investments with an
original maturity of less than 90 days.
 
INVENTORIES
 
     Inventories are stated at the lower of cost or market. Finished goods are
stated at standard cost which approximates the first-in, first-out method of
accounting. Inventories of steel coil are stated on an identified cost basis.
Inventories of coating and lining materials, as well as materials and supplies,
are stated on an average cost basis.
 
PROPERTY AND EQUIPMENT
 
     Property and equipment are stated at cost. Maintenance and repairs are
expensed as incurred and costs of improvements and renewals are capitalized.
Depreciation is determined by the straight-line method based on the estimated
useful lives of the related assets. Effective January 1, 1993, the Company
extended the estimated useful lives of certain buildings and equipment to better
reflect the estimated periods when such assets will remain in service. The
effect of this change was to reduce depreciation expense in 1993 by $384. Upon
disposal, costs and related accumulated depreciation of the assets are removed
from the accounts and resulting gains or losses are reflected in operations.
 
                                       F-7
<PAGE>   55
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
     Estimated useful lives by major classes of property and equipment are as
follows:
 
<TABLE>
                <S>                                                <C>
                Land improvements................................  20 years
                Buildings........................................  30 years
                Equipment........................................  5-18 years
</TABLE>
 
PROPERTY UNDER CAPITAL LEASES
 
     The Company leases land, buildings and equipment under long-term capital
leases. Buildings are being amortized over their estimated useful lives of
thirty years and equipment is being amortized on a straight-line basis over
estimated useful lives of ten to eighteen years.
 
REVENUE RECOGNITION
 
     Revenues from construction contracts in the Company's Water Transmission
business segment are recognized on the percentage-of-completion method, measured
by the percentage of total costs incurred to date to the estimated total costs
of each contract. Contract costs include all direct material and labor costs and
those indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs and depreciation. Selling, general and administrative
costs are charged to expense as incurred. Provisions for losses on uncompleted
contracts are made in the period such losses are estimated. Changes in job
performance, job conditions and estimated profitability, including those arising
from contract penalty provisions, and final contract settlements may result in
revisions to costs and income and are recognized in the period in which the
revisions are determined.
 
     Revenues from the Company's Tubular Products business segment are
recognized when products are shipped.
 
INCOME TAXES
 
     The Company records deferred income tax liabilities and assets based upon
the difference between the financial statement and income tax bases of assets
and liabilities using enacted income tax rates. Valuation allowances are
established when necessary to reduce deferred income tax assets to the amount
expected to be realized. Income tax expense is the tax payable for the period
and the change during the period in net deferred income tax assets and
liabilities.
 
CONCENTRATIONS OF CREDIT RISK
 
     Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables. Trade
receivables are with a large number of customers, including municipalities,
manufacturers, distributors and contractors, dispersed across a wide geographic
base.
 
INTERIM INFORMATION
 
   
     The consolidated financial statements as of September 30, 1996 and for the
nine months ended September 30, 1995 and 1996 are unaudited; however, in the
opinion of management, these consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, considered
necessary for fair presentation of the Company's consolidated financial
position, operating results and cash flows. Results of interim periods are not
necessarily indicative of results of the entire year.
    
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     Statement of Financial Accounting Standards No. 107, "Disclosure about Fair
Value of Financial Instruments", defines the fair value of financial instruments
as the amount at which the instrument could be
 
                                       F-8
<PAGE>   56
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
exchanged in a current transaction between willing parties, other than in a
forced or liquidation sale. The carrying amounts of financial instruments
including cash, trade receivables, note payable and accounts payable approximate
fair value because of the short maturity for these instruments. The fair value
approximates the carrying value of the Company's borrowings under its long-term
arrangements based upon interest rates available for the same or similar loans.
 
RECENT ACCOUNTING PRONOUNCEMENTS
 
     In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. ("SFAS") 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of ", that
establishes criteria for and requires recognition of impairment losses on long-
lived assets. SFAS 121 also prescribes the accounting for long-lived assets that
are expected to be disposed of in future periods. The Company adopted SFAS 121
in the first quarter of 1996 and, based on estimates as of December 31, 1995,
believes the effect of adoption, if any, will not have a material effect on the
financial statements of the Company.
 
     In October 1995, the Financial Accounting Standards Board issued SFAS 123,
"Accounting for Stock-Based Compensation", which is effective for fiscal years
beginning after December 15, 1995. This Standard encourages employers to adopt a
fair value-based method of accounting to recognize compensation expense for the
employee stock compensation plans. However, it does not require the fair
value-based method to be adopted and provides that employers may continue to
account for those plans using the accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Companies that elect not to adopt
the fair value-based method must disclose pro forma net income and earnings per
share, as if the fair value-based method had been applied. The Company does not
currently intend to adopt the fair value-based method of recognition under SFAS
123 and does not expect that the fair value-based method will have a material
impact on pro forma net income or pro forma earnings per share.
 
2.  ACQUISITION (UNAUDITED):
 
     On May 31, 1996 the Company acquired Thompson Pipe and Steel Company
("Thompson Pipe and Steel"), a manufacturer of water transmission pipe
headquartered in Denver, Colorado. The acquisition ("the Acquisition") was
accomplished through the Company's purchase of all of the issued and outstanding
capital stock of Thompson Pipe and Steel from Inter-City Products Corporation, a
corporation based in Toronto, Canada, and its affiliates ("ICP").
 
     The principal assets acquired by the Company in the Acquisition were steel
pipe manufacturing facilities located in Denver, Colorado and Princeton,
Kentucky. The Kentucky manufacturing facility was closed by Thompson Pipe and
Steel in 1995. The Company intends to continue operating the manufacturing
facility in Denver, Colorado, and intends to dispose of the manufacturing
facility located in Princeton, Kentucky.
 
     The purchase price paid by the Company for the capital stock of Thompson
Pipe and Steel was approximately $400. In addition, the Company purchased from
ICP certain indebtedness of Thompson Pipe and Steel to ICP in the amount of
approximately $4.8 million. The purchase price was determined through
arms-length negotiations between the Company and ICP. The funds used to pay the
purchase price were obtained pursuant to the terms of the Company's Amended and
Restated Financing Agreement with the CIT Group/Business Credit, Inc. dated as
of May 31, 1996.
 
     The accompanying consolidated financial statements include the results of
operations of Thompson Pipe and Steel from the date of acquisition. The
acquisition was accounted for using the purchase method of accounting.
 
                                       F-9
<PAGE>   57
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
2.  ACQUISITION (UNAUDITED), CONTINUED:
     The following unaudited pro forma information represents the results of
operations of the Company as if the Acquisition had occurred at the beginning of
each period presented:
 
   
<TABLE>
<CAPTION>
                                                                            (UNAUDITED)
                                                                  --------------------------------
                                                                                    NINE MONTHS
                                                                   YEAR ENDED          ENDED
                                                                  DECEMBER 31,     SEPTEMBER 30,
                                                                  ------------   -----------------
                                                                       1995             1996
                                                                  ------------   -----------------
        <S>                                                          <C>            <C>
        Net sales..............................................      $135,272         $ 113,301
        Net income.............................................      $     46         $   4,092
        Net income per share...................................      $   0.06         $    0.74
</TABLE>
    
 
     The unaudited pro forma information does not purport to be indicative of
the results which would actually have been obtained had the Acquisition occurred
at the beginning of the periods indicated or which may be obtained in the
future.
 
3.  COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS:
 
   
<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                       ---------------------     SEPTEMBER 30,
                                                         1994         1995           1996
                                                       --------     --------     -------------
    <S>                                                <C>          <C>          <C>
    Costs incurred on uncompleted contracts..........  $ 22,675     $ 45,700       $  57,859
    Estimated earnings...............................     5,096        8,382          16,396
                                                       --------     --------        --------
                                                         27,771       54,082          74,255
    Less billings to date............................   (24,959)     (44,191)        (64,931)
                                                       --------     --------        --------
                                                       $  2,812     $  9,891       $   9,324
                                                       ========     ========        ========
</TABLE>
    
 
     Costs and estimated earnings in excess of billings on uncompleted contracts
represents revenue earned under the percentage of completion method but not
billable based on the terms of the contracts. These amounts are billed based on
the terms of the contracts which include achievement of milestones, partial
shipments or completion of the contracts.
 
4.  INVENTORIES:
 
   
<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                         -------------------     SEPTEMBER 30,
                                                          1994        1995           1996
                                                         -------     -------     -------------
    <S>                                                  <C>         <C>         <C>
    Finished goods.....................................  $ 4,155     $ 3,423        $ 4,464
    Raw materials......................................    8,159       6,665         10,248
    Materials and supplies.............................    1,431       1,321            821
                                                         -------     -------        -------
                                                         $13,745     $11,409        $15,664
                                                         =======     =======        =======
</TABLE>
    
 
5.  PROPERTY AND EQUIPMENT:
 
   
<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                         -------------------     SEPTEMBER 30,
                                                          1994        1995           1996
                                                         -------     -------     -------------
    <S>                                                  <C>         <C>         <C>
    Land and improvements..............................  $ 2,671     $ 2,736       $   4,464
    Buildings..........................................    5,826       5,915          11,935
    Equipment..........................................   18,956      20,835          30,500
    Construction in progress...........................    1,116       1,639           4,504
                                                         -------     -------         -------
                                                          28,569      31,125          51,403
    Less accumulated depreciation......................   (8,626)     (9,927)        (20,777)
                                                         -------     -------         -------
                                                         $19,943     $21,198       $  30,626
                                                         =======     =======         =======
</TABLE>
    
 
                                      F-10
<PAGE>   58
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6.  NOTE PAYABLE TO FINANCIAL INSTITUTION:
 
   
     Effective May 31, 1996, the Company refinanced a substantial portion of its
term debt, capital leases and its revolving credit facility. The revolving
credit facility was paid in full and was replaced by a new facility from a
financial institution ("Senior Lender") which extends to April 30, 2001. Under
this new agreement, borrowings are limited to the lesser of $44 million or 85%
of eligible trade receivables plus 60% of eligible inventories and 50% of
eligible costs and estimated earnings in excess of billings on uncompleted
contracts. The Company had an available unused line of credit of $14.0 million
and $8.4 million at December 31, 1995 and September 30, 1996, respectively.
Amounts outstanding under this facility bear interest at prime, payable monthly.
Prime interest rate was 8.75% and 8.25% at December 31, 1995 and September 30,
1996, respectively.
    
 
7.  LONG-TERM DEBT:
 
   
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                             -------------------     SEPTEMBER 30,
                                                              1994        1995           1996
                                                             -------     -------     -------------
<S>                                                          <C>         <C>         <C>
Series A subordinated debentures, interest at 15% payable
  quarterly................................................  $ 2,667

Series B convertible subordinated debentures, interest
  payable quarterly at 8%. Series B debentures are
  convertible into shares of Class B common stock under
  certain terms at $.87 per share, price subject to
  adjustment as defined....................................    1,302

Series C convertible subordinated debentures, interest at
  12% payable quarterly. Series C debentures are
  convertible into Class B common stock under certain terms
  at $1.00 per share.......................................    1,500

Industrial Development Bonds, issued in accordance with
  Internal Revenue Code Section 144(a), variable interest
  (5.5%, 5.25% and 3.85% at December 31, 1994 and 1995 and
  September 30, 1996) payable monthly; annual principal
  payments of $250, collateralized by property and
  equipment and guaranteed by an irrevocable letter of
  credit from a bank.......................................    4,000     $ 3,750        $ 3,500

Industrial Development Bonds, issued in accordance with
  Internal Revenue Code Section 144(a), variable interest
  (4.20% at September 30, 1996) payable monthly; annual
  principal payments of $600, collateralized by property
  and equipment and guaranteed by an irrevocable letter of
  credit from a bank.......................................                                 490

Note payable, due in monthly installments of $63, including
  variable interest (9.48% at December 31, 1994),
  collateralized by equipment..............................    1,595

Note payable to Senior Lender, due in monthly payments of
  $175 per month plus interest at prime plus 2.00%,
  collateralized by receivables, inventories, and property
  and equipment............................................    2,800         450

Note payable to Senior Lender, due in monthly payments of
  $175 per month plus interest at prime plus 1.75%,
  collateralized by receivables, inventories, and property
  and equipment............................................    7,000       7,000

Note payable to Senior Lender, due in quarterly payments of
  $300, plus interest at prime plus 0.25% with balance due
  September 30, 2001, collateralized by receivables,
  inventories, and property and equipment..................                               5,700

Note payable to Senior Lender, due in quarterly payments of
  $150, plus interest at prime plus 0.25% with balance due
  September 30, 2001, collateralized by receivables,
  inventories, and property and equipment..................                               3,000
</TABLE>
    
 
                                      F-11
<PAGE>   59
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
7.  LONG-TERM DEBT, CONTINUED:
 
   
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                             -------------------     SEPTEMBER 30,
                                                              1994        1995           1996
                                                             -------     -------     -------------
<S>                                                          <C>         <C>         <C>
Other......................................................       10          10             73
                                                             -------     -------        -------
Total long-term debt, including amounts due to related
  parties in 1994..........................................   20,874      11,210         12,763
Less current portion.......................................   (2,986)     (2,100)        (2,590)
                                                             -------     -------        -------
                                                             $17,888     $ 9,110        $10,173
                                                             =======     =======        =======
</TABLE>
    
 
Amounts are displayed on the balance sheet as follows:
 
   
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                             -------------------     SEPTEMBER 30,
                                                              1994        1995           1996
                                                             -------     -------     -------------
<S>                                                          <C>         <C>         <C>
  Current portion of long-term debt........................  $ 2,986     $ 2,100        $ 2,590
  Long-term debt, less current portion.....................   12,810       9,110         10,173
  Long-term debt, due to related parties...................    5,078
                                                             -------     -------     -------------
                                                             $20,874     $11,210        $12,763
                                                             =======     =======     ==========
</TABLE>
    
 
   
     The Company is required to maintain certain financial ratios under its loan
agreements. As of September 30, 1996, the most significant of these is
maintaining a defined leverage ratio of less than 2.0 to 1.
    
 
     Future annual principal payment maturities are as follows:
 
   
<TABLE>
<CAPTION>
                                                     DECEMBER 31,     SEPTEMBER 30,
                                                     ------------     -------------
                <S>                                  <C>              <C>
                1996...............................    $  2,100
                1997...............................       2,350          $ 2,590
                1998...............................       2,350            2,063
                1999...............................       1,400            2,050
                2000...............................         250            2,050
                Thereafter.........................       2,760            4,010
                                                        -------          -------
                                                       $ 11,210          $12,763
                                                        =======          =======
</TABLE>
    
 
8.  LEASES:
 
CAPITAL LEASES
 
     The Company leases land, buildings, five pipe mills and additional
equipment under two separate agreements with a related party (see Note 9).
During 1994, the debt underlying the lease for the pipe mills and additional
equipment was paid in full and title was transferred to the Company. During
1989, $3.0 million of debt related to the land and buildings was refinanced with
a lender on a long-term basis; this lease was renegotiated during 1994. The
Company's lease supports the related party's debt and payments on the lease are
equal to the principal and interest payments on the underlying debt, and are
made directly to the lender.
 
     The Company also leases certain assets at its Kentucky facility from the
Kentucky Rural Economic Development Authority. In addition, the Company has
other capital leases for office and manufacturing equipment.
 
                                      F-12
<PAGE>   60
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
 8.  LEASES, CONTINUED:
     The future minimum lease payments under these capital leases, and the
present value of the minimum lease payments as of December 31, 1995 are as
follows:
 
<TABLE>
                <S>                                  <C>              <C>
                1996...............................    $    487
                1997...............................         466
                1998...............................         462
                1999...............................         391
                2000...............................         344
                Thereafter.........................       2,752
                                                        -------
                Total minimum lease payments.......       4,902
                Less -- Amount representing
                  interest.........................      (1,751)
                                                        -------
                Present value of minimum lease
                  payments including current
                  maturities of $221, with interest
                  rates ranging from 3.25% to
                  11.25%, including amounts to
                  related party....................    $  3,151
                                                        =======
</TABLE>
 
OPERATING LEASES
 
   
     The Company has entered into various equipment leases with terms of five
years or less. Total rental expense for the years ended December 31, 1993, 1994
and 1995 was $1,279, $787 and $789, respectively. During the nine months ended
September 30, 1995 and 1996, total rental expense amounted to $366 and $783,
respectively. As of December 31, 1995 future minimum payments for operating
leases with initial or remaining terms in excess of one year are:
    
 
<TABLE>
            <S>                                                           <C>
            1996........................................................  $  424
            1997........................................................     231
            1998........................................................      36
            1999........................................................       2
                                                                           -----
                                                                          $  693
                                                                           =====
</TABLE>
 
 9.  RELATED PARTY TRANSACTIONS:
 
   
     Multnomah Land & Equipment (Multnomah) is a partnership in which a director
of the Company is a General Partner. As discussed in Note 8, the Company entered
into two separate agreements to lease a pipe manufacturing facility and
equipment from Multnomah in 1982. The amounts paid under these lease agreements
amounted to $730, $521, $344, $257 and $257 for the years ended December 31,
1993, 1994 and 1995 and for the nine months ended September 30, 1995 and 1996,
respectively. During 1994, the Company exercised its option to purchase
equipment for $600. The Company has the option to acquire the pipe manufacturing
facility, exercisable at any time prior to the expiration of the lease, for the
greater of $1.0 million or the outstanding balance of the unpaid principal and
accrued interest on the loan collateralized by such property ($2.8 million at
December 31, 1995).
    
 
10.  RETIREMENT PLANS:
 
   
     The Company has a defined contribution retirement plan covering
substantially all of its employees. Total expense in 1993, 1994 and 1995
amounted to $196, $195 and $230, respectively. During the nine months ended
September 30, 1995 and 1996, total expense was approximately $171 and $345,
respectively. The Company matches up to 50% of employee contributions to the
plan, subject to certain limitations.
    
 
                                      F-13
<PAGE>   61
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
10.  RETIREMENT PLANS, CONTINUED:
     Thompson Pipe and Steel has two noncontributory defined benefit plans which
cover substantially all employees. Benefits under the union pension plan are
based upon a flat benefit formula, while benefits under the retirement plan are
based upon a final pay formula. The funding policy for each plan is based on
current plan costs plus amortization of the unfunded plan liability.
 
11.  CAPITAL STOCK:
 
     On July 28, 1995, the Board of Directors amended and restated the Company's
Articles of Incorporation subject to approval by the stockholders of the
Company. The Company's stockholders approved the amended and restated Articles
of Incorporation on August 8, 1995. The revised articles, among other things,
redesignated the Class A and Class B common stock of the Company as Common
Stock, authorized a 0.858-for-1 reverse stock split of each outstanding share of
Common Stock, increased the authorized capital stock of the Company to
15,000,000 shares of Common Stock and 10,000,000 shares of Preferred Stock,
authorized the Board of Directors to issue blank check Preferred Stock, and
provided for the classification of the Board of Directors into three classes
with staggered terms. The Board of Directors also authorized and approved the
1995 Stock Incentive Plan and the reservation of 500,000 shares of common stock
for issuance thereunder (429,000 after the stock split noted above).
Additionally, the Board authorized and approved, subject to approval by the
stockholders, the 1995 Stock Option Plan for Nonemployee Directors and the
reservation of 100,000 shares of Common Stock (after the stock split) for
issuance thereunder. The Company issued options to purchase 171,328 shares of
common stock (146,999 after the stock split). All share and per share amounts
have been restated to retroactively reflect the aforementioned reverse stock
split.
 
     On August 8, 1995, the Company held a special meeting of stockholders. The
stockholders authorized and approved the Second Restated Articles of
Incorporation, which among other things, established a six-person Board of
Directors in three classes. The stockholders elected directors, approved the
Company's 1995 Stock Incentive Plan and the reservation of 429,000 shares of
Common Stock for issuance thereunder, and approved the Company's 1995 Stock
Option Plan for Nonemployee Directors and the reservation of 100,000 shares of
Common Stock for issuance thereunder.
 
     Options to purchase shares of the Company's Common Stock have been granted
to key employees and directors with exercise prices determined by the Board of
Directors to be the fair value of the stock at the date of grant. These options
become exercisable according to vesting schedules which range from four to five
years and expire ten years after the date of grant.
 
     At December 31, 1995, options to purchase 152,036 shares were vested and
exercisable. Options outstanding and transactions were as follows:
 
   
<TABLE>
<CAPTION>
                                                                             EXERCISE PRICE
                                                                OPTIONS          RANGE
                                                                -------     ----------------
    <S>                                                         <C>         <C>
    Balance, December 31, 1992................................  138,523     $ 0.87 - $ 3.50
    Options surrendered.......................................  (10,296)         $3.50
                                                                -------
    Balance, December 31, 1993................................  128,227     $ 0.87 - $ 3.50
    Options granted...........................................   45,187          $1.00
                                                                -------
    Balance, December 31, 1994................................  173,414     $ 0.87 - $ 1.00
    Options granted...........................................  146,999          $4.78
                                                                -------
    Balance, December 31, 1995................................  320,413     $ 0.87 - $ 4.78
    Options granted...........................................   18,000     $11.50 - $17.25
    Options exercised.........................................  (36,764)    $ 0.90 - $ 4.78
    Options cancelled.........................................     (340)         $4.78
                                                                -------
    Balance, September 30, 1996...............................  301,309     $ 0.87 - $17.25
                                                                =======
</TABLE>
    
 
                                      F-14
<PAGE>   62
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
11.  CAPITAL STOCK, CONTINUED:

     On November 30, 1995, the Company completed an initial public offering
(IPO) of 1,932,000 shares of common stock at an issuance price of $9.00 per
share. In conjunction with the IPO, all of the Company's outstanding Series B
and Series C Convertible Subordinated Debentures were converted into a total of
2,629,296 shares of the Company's Common Stock.
 
12.  COMMITMENTS AND CONTINGENCIES:
 
     The U.S. Environmental Protection Agency ("EPA") sent a Special Notice
Letter for Remedial Investigation/Feasibility Study dated June 8, 1995 (the
"Special Notice") to the Company notifying the Company of potential liability,
as defined by Section 107(a) of the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA" or "Superfund"), that the Company may
have incurred with respect to a site in Clackamas, Oregon that was added to the
Superfund National Priorities List ("NPL") on October 14, 1992 (the "Site"). The
Company conducted manufacturing operations on a portion of the Site prior to its
Chapter 11 Bankruptcy in 1986. The Company has not owned, leased or operated at
the Site since the confirmation of the Company's Plan of Reorganization on
December 11, 1986 ("the Plan").
 
     The Special Notice states that the EPA believes that the Company may be a
Potentially Responsible Party ("PRP") with respect to the Site. Three other
parties also received Special Notice letters naming them as PRPs with respect to
the Site. PRPs may be ordered to perform response actions which may include, but
are not limited to, conducting a Remedial Investigation/Feasibility Study
("RI/FS"), conducting a Remedial Design/Remedial Action ("RD/RA"), and other
investigation, planning and remediation activities (collectively, the "Response
Activities"). The Special Notice triggered a 60-day period during which the
PRPs, including the Company, were invited to participate in formal negotiations
with the EPA. The Special Notice also encouraged the PRPs to negotiate a
settlement providing for the conduct by the PRPs of Response Activities at the
Site.
 
     By letter dated June 30, 1995, the Company advised the EPA of its position
that any claims by the EPA with respect to liability for Response Activities at
the Site were discharged by the United States Bankruptcy Court's confirmation of
the Plan and that the confirmation of the Plan created an injunction against
bringing pre-confirmation claims against the Company.
 
     On August 28, 1995, the Company filed a motion with the United States
Bankruptcy Court seeking an order to reopen its bankruptcy proceedings. The
Company's motion was granted August 29, 1995. The Company filed a complaint on
October 4, 1995 seeking a declaratory judgment from the Bankruptcy Court that
all environmental claims by the EPA or the Oregon Department of Environmental
Quality ("DEQ"), related to the Company's operations prior to the completion of
its bankruptcy reorganization were discharged by the Bankruptcy Court's
confirmation of the Company's Plan.
 
   
     On November 13, 1995 both the EPA and the DEQ (the "Agencies") filed
answers to the Company's motion for declaratory judgment. Both the EPA and the
DEQ asserted defenses against the Company's claim including an assertion that
the Company did not provide notice of its bankruptcy proceeding, that the
bankruptcy proceeding cannot discharge an injunctive order for ongoing pollution
and that the environmental claims are not dischargeable because they are
post-confirmation claims. In addition to asking the court to allow its
environmental claims against the Company, the EPA has also asked for a
declaration that the Company is required to amend its schedule of liabilities
pursuant to the bankruptcy or permit the EPA to file a late proof of claim. The
Company, the EPA and the DEQ have substantially completed discovery in this
matter.
    
 
     In 1995, the Company retained Environmental Strategies Corporation ("ESC"),
an environmental consulting and engineering firm experienced in conducting
remedial investigations and feasibility studies and designing remedial
activities to prepare an estimate of the cost of future Response Activities at
the Site. ESC has delivered a report (the "ESC Report") that estimates the cost
of the Response Activities at the Site to be
 
                                      F-15
<PAGE>   63
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  COMMITMENTS AND CONTINGENCIES, CONTINUED:
between $15.4 million and $20.1 million over a 25-year period, not including the
costs of Response Activities already incurred by the EPA. The evaluation of the
Site upon which the ESC Report was based involved the review of all information
available to the Company with respect to the contamination of the Site,
including studies of the Site previously conducted by the EPA. ESC did not
conduct physical evaluation or testing at the Site. ESC compared reported levels
of contamination at the Site to establish clean-up criteria. ESC then selected
the remedial alternatives for soil and ground water remediation which it
believes will satisfy established clean-up criteria through technology generally
approved by the EPA at sites with similar contamination. Although the Company
believes that the ESC Report provides a reasonable estimate of the cost of
future Response Activities at the Site based on currently available information,
no assurance can be given that a RI/FS would not reveal additional information
as to the nature or level of contaminants at the Site. Furthermore, no assurance
can be given that the EPA will agree with the remediation alternatives assumed
to be acceptable in the ESC Report, or that the actual cost of the Response
Activities at the Site will not materially exceed ESC's estimates.
 
   
     In August 1996, the Bankruptcy Court ordered a temporary suspension in the
litigation to provide the parties the opportunity to pursue settlement options.
In September 1996, the Company entered into mediation with the Agencies in an
attempt to resolve the matter without incurring the substantial additional
expense of continuing the litigation. As a result of the mediation process, the
Company and the Agencies entered into an agreement in principle with respect to
a proposed settlement of the litigation (the "Settlement Agreement"). Under the
terms of the Settlement Agreement, the Company would pay the Agencies $1.0
million, and deposit an additional $2.3 million in an escrow account or trust
(the "Trust"), with the interest income on the Trust to be distributed to the
Agencies. A condition of the Settlement Agreement is that title to the portion
of the Site that is currently vacant (the "Property") be transferred to the
Agencies.
    
 
   
     The Settlement Agreement provides that the Agencies would complete
construction of the remedial action at the Property in accordance with their
standards and would have the right to sell the Property at any time during the
clean-up process. If the Property is sold by the Agencies during the clean-up
process, the $2.3 million held in the Trust would be returned to the Company.
Once the Property has been remediated as evidenced by completion of construction
of the remedial action and issuance of Remedial Action Reports or their
equivalents and the Property is usable for a "reasonable commercial or
industrial use", the Agencies would have the option to continue to market the
Property for one year. If the Property is not sold during this period, the
Company could elect to have the Property conveyed to it in exchange for the $2.3
million held in the Trust. If the Company takes ownership of the Property and
sells it within one year thereafter, fifty percent of any net proceeds in excess
of $2.3 million would have to be paid to the Agencies. The Agencies would
provide a "Prospective Purchaser Agreement" which would specify that any
prospective purchaser of the Property would not be liable for any past
environmental contamination or any ongoing remediation resulting from past
operations at the Site. If the Company elects not to take ownership of the
Property, the Agencies would retain the $2.3 million held in the Trust. If the
Agencies are unable to complete construction of the remedial action and clean up
soils so that the Property can be used for a reasonable commercial or industrial
use within ten years, they would be required to return the $2.3 million held in
the Trust to the Company.
    
 
   
     The Company and the Agencies have agreed to embody the terms of the
Settlement Agreement in a Consent Decree patterned after the EPA's National
Model for Consent Decrees. The Consent Decree would also contain covenants not
to sue, reservations of rights, and protection for the Company from claims for
contribution for environmental cleanup costs.
    
 
   
     The Settlement Agreement is conditioned upon the transfer of title to the
Property to the Agencies. The Property is owned by at least one other PRP, which
has not yet executed an agreement to transfer title to the Property to the
Agencies. Furthermore, although the Settlement Agreement reflects the material
terms of the proposed settlement agreed to by the Company and the Agencies, the
Settlement Agreement does not
    
 
                                      F-16
<PAGE>   64
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  COMMITMENTS AND CONTINGENCIES, CONTINUED:
   
represent a final settlement of the litigation. A final binding settlement of
the litigation will be effected only through the Bankruptcy Court's entry of a
consent Decree for the Site, which must be prepared and agreed upon, and which
is subject to public comment and the approval of the United States Department of
Justice, the EPA, the State of Oregon and the Company's Board of Directors. No
assurance can be given that the Company and the Agencies will be able to reach
agreement on a mutually acceptable Consent Decree, that the terms of any such
Consent Decree will be substantially the same as those set forth in the
Settlement Agreement or that any such Consent Decree will be approved by all
required parties.
    
 
   
     The Company believes that once the Property is available for a "reasonable
commercial or industrial use", it would have a value in excess of $2.3 million.
Consequently, the Company does not believe that the $2.3 million held in the
Trust is "impaired" under generally accepted accounting principles. Accordingly,
the Company has recorded the $1.0 million payment as an expense in the third
quarter of 1996.
    
 
   
     The Company believes that any claims with respect to liability for the
costs of the Response Activities were discharged by the United States Bankruptcy
Court's confirmation of the Plan. The Company also believes that a settlement of
the litigation with the Agencies can be achieved on substantially the terms set
forth in the Settlement Agreement. However, no assurance can be given that the
Company and the Agencies will actually achieve a settlement or, if a settlement
is not achieved, that the Company will be successful in obtaining a judgment
from the Bankruptcy Court that the confirmation of the Plan discharged its
liability to the Agencies for environmental claims with respect to the Site or
that it will not ultimately be found to have liability with respect to the Site.
In the event that the Company and the Agencies are not able to achieve a
settlement and the bankruptcy defense is unsuccessful, the Company's ultimate
liability will depend on the total costs of the Response Activities and the
related costs and fees of the allocation process, the Company's relative
contribution of contaminants at the Site and the final allocation of costs to
the Company which may ultimately result in litigation and take several years to
determine. Based upon a preliminary estimate of the types of contaminants found
and the number of years each PRP operated on the Site, the Company believes
that, if a settlement is not achieved and its bankruptcy defense is
unsuccessful, its liability for Response Activities and the costs and fees of
the allocation process would range from $4.0 million to $6.0 million on an
undiscounted basis. This range is primarily based on the length of time the
Company operated at the Site. The most contaminated portion of the Site was
operated as a coating facility for approximately 30 years. Another of the PRPs
operated at the coating facility for approximately 23 years from 1955 to 1978.
The Company operated the coating facility from 1978 to 1985, or approximately
23% of the time the coating facility was in operation. Accordingly, the Company
has estimated its allocable share of costs to be 20-25%. However, there is no
assurance that the Company will not ultimately bear liability with respect to
those costs disproportionate to the duration of the Company's operations at the
Site. If the Company is ultimately found to have liability with respect to the
Site, no assurance can be given that such liability would not have a material
adverse effect on the Company's business, financial condition and results of
operations.
    
 
   
     From time to time, the Company is involved in litigation relating to claims
out of its operations in the normal course of its business. The Company
maintains insurance coverage against potential claims in amounts which it
believes to be adequate. Management believes that it is not presently a party to
any litigation, the outcome of which would have a material adverse effect on the
Company's business or operations.
    
 
   
     As of December 31, 1995 and September 30, 1996, the Company had outstanding
raw material purchase commitments of approximately $9 million and $13 million,
respectively.
    
 
                                      F-17
<PAGE>   65
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
13.  QUASI-REORGANIZATION:
 
     In conjunction with the Company's emergence on December 18, 1986 from
Chapter 11 reorganization, the Board of Directors approved a
quasi-reorganization of the Company as of December 31, 1986. As a result of the
quasi-reorganization, the Company adjusted the carrying value of assets and
liabilities to fair value, off-setting such adjustments against additional
paid-in capital. The Company's prior accumulated deficit also was off-set
against additional paid-in capital. Accordingly, retained earnings in the
accompanying financial statements reflects the results of operations since
January 1, 1987.
 
14.  INCOME TAXES:
 
     The Company adopted SFAS 109 "Accounting for Income Taxes", on a
prospective basis effective January 1, 1993. The cumulative effect of the change
in accounting method has been recognized in the amount of $837 in the statement
of income for the year ended December 31, 1993. As of December 31, 1994, the
Company had $1.0 million in net operating loss carryforwards for regular federal
income tax purposes and $500 for alternative minimum tax ("AMT") purposes. The
Company also had approximately $332 of investment tax and AMT credit
carryforwards available for federal income tax purposes. During 1995, the
Company utilized all of its remaining tax carryforwards and credits to reduce
taxable income and current income taxes payable.
 
   
     As of September 30, 1996, the Company had approximately $5.1 million of net
operating loss carryforwards as a result of the acquisition of Thompson Pipe and
Steel Company which are limited in their use to approximately $340 per year
during the 15 year carryforward period.
    
 
     The components of the provision (benefit) for income taxes are as follows:
 
   
<TABLE>
<CAPTION>                                                                      NINE MONTHS
                                                                                  ENDED
                                              YEAR ENDED DECEMBER 31,         SEPTEMBER 30,
                                            ---------------------------     ------------------
                                            1993       1994       1995       1995        1996
                                            -----     ------     ------     ------      ------
    <S>                                     <C>       <C>        <C>        <C>         <C>
    Current:
      Federal...........................              $   70     $1,728     $  960      $4,250
      State.............................                 133        425        386         983
    Deferred............................    $(333)     1,089      1,070        753         130
                                            -----     ------     ------     ------      ------
                                            $(333)    $1,292     $3,223     $2,099      $5,363
                                            =====     ======     ======     ======      ======
</TABLE>
    
 
     The difference between the effective income tax rate and the statutory U.S.
Federal income tax rate is explained as follows:
 
   
<TABLE>
<CAPTION>                                                                       NINE MONTHS
                                                                                   ENDED
                                             YEAR ENDED DECEMBER 31,           SEPTEMBER 30,
                                          -----------------------------     ------------------
                                          1993       1994        1995        1995        1996
                                          -----     -------     -------     ------      ------
    <S>                                   <C>       <C>         <C>         <C>         <C>
    Provision (benefit) at statutory
      rate............................    $(308)    $ 1,174     $ 2,832     $1,881      $4,693
    State provision (benefit), net of
      federal benefit.................      (46)        180         280        285         639
    Other.............................       21         (62)        111        (67)         31
                                          -----     -------     -------     ------      ------
                                          $(333)    $ 1,292     $ 3,223     $2,099      $5,363
                                          =====     =======     =======     ======      ======
</TABLE>
    
 
                                      F-18
<PAGE>   66
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
14.  INCOME TAXES, CONTINUED:
     The tax effect of temporary differences that give rise to significant
portions of deferred tax assets and liabilities are presented below:
 
   
<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                         -------------------     SEPTEMBER 30,
                                                          1994        1995           1996
                                                         -------     -------     -------------
    <S>                                                  <C>         <C>         <C>
    Deferred tax assets:
      Accounts receivable, due to allowance for
         doubtful accounts.............................  $   224     $   340        $   249
      Alternative minimum tax credit...................      199
      Leased assets....................................      146         118            100
      General business credit..........................      133
      Net operating loss carryforwards.................      332                      2,000
      Other............................................      554         449            852
                                                         -------     -------        -------
         Total deferred tax assets.....................    1,588         907          3,201
                                                         -------     -------        -------
    Deferred tax liabilities:
      Property and equipment, principally due to
         differences in depreciation and
         amortization..................................   (1,221)     (1,576)        (1,882)
      Other............................................      (56)        (90)           (78)
                                                         -------     -------        -------
         Total deferred tax liabilities................   (1,277)     (1,666)        (1,960)
                                                         -------     -------        -------
         Net deferred tax asset (liability)............  $   311     $  (759)       $ 1,241
                                                         =======     =======        =======
    Deferred tax assets and liabilities are included in
    the accompanying balance sheets as follows:
      Deferred tax assets -- current...................  $ 1,414     $   694        $ 1,175
      Deferred tax asset -- noncurrent.................                                  66
      Deferred tax liabilities -- noncurrent...........   (1,103)     (1,453)
                                                         -------     -------        -------
      Net deferred tax assets (liabilities)............  $   311     $  (759)       $ 1,241
                                                         =======     =======        =======
</TABLE>
    
 
                                      F-19
<PAGE>   67
 
                             NORTHWEST PIPE COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
15.  SEGMENT INFORMATION AND MAJOR CUSTOMERS:
 
     Information with respect to the segments of the business is as follows:
 
   
<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                                           YEAR ENDED DECEMBER 31,           SEPTEMBER 30,
                                         ---------------------------     ---------------------
                                          1993      1994      1995        1995          1996
                                         -------   -------   -------     -------      --------
    <S>                                  <C>       <C>       <C>         <C>          <C>
    Net sales
      Water Transmission...............  $29,995   $41,105   $61,215     $42,713      $ 67,202
      Tubular Products.................   24,442    32,536    36,500      29,214        35,247
                                         -------   -------   -------     -------      --------
                                         $54,437   $73,641   $97,715     $71,927      $102,449
                                         =======   =======   =======     =======      ========
    Identifiable assets
      Water Transmission...............  $29,641   $35,882   $46,401     $40,970      $ 75,233
      Tubular Products.................   12,736    17,462    14,755      19,414        19,757
      Corporate........................    2,448     3,464     3,298       2,851         8,791
                                         -------   -------   -------     -------      --------
                                         $44,825   $56,808   $64,454     $63,235      $103,781
                                         -------   -------   -------     -------      --------
    Operating income (loss)
      Water Transmission...............  $(1,179)  $ 3,320   $10,994     $ 6,744      $ 14,344
      Tubular Products.................    4,538     5,665     5,078       4,311         5,328
      Corporate........................   (2,199)   (2,724)   (4,294)     (2,838)       (4,666)
                                         -------   -------   -------     -------      --------
                                         $ 1,160   $ 6,261   $11,778     $ 8,217      $ 15,006
                                         =======   =======   =======     =======      ========
    Capital expenditures
      Water Transmission...............  $ 2,994   $ 1,300   $ 1,194     $   736      $  2,069
      Tubular Products.................    1,139       267     1,242         743         1,218
      Corporate........................       84       100       120         112           123
                                         -------   -------   -------     -------      --------
                                         $ 4,217   $ 1,667   $ 2,556     $ 1,591      $  3,410
                                         =======   =======   =======     =======      ========
    Depreciation and amortization
      expense
      Water Transmission...............  $   900   $   987   $ 1,020     $   729      $  1,008
      Tubular Products.................      200       238       242         194           299
      Corporate........................       70        77       100          59            65
                                         -------   -------   -------     -------      --------
                                         $ 1,170   $ 1,302   $ 1,362     $   982      $  1,372
                                         =======   =======   =======     =======      ========
</TABLE>
    
 
     During 1995, 1994 and 1993, sales to one customer represented 12%, 11% and
14% of total sales, respectively.
 
                                      F-20
<PAGE>   68
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholder
Thompson Pipe and Steel Company and subsidiary:
 
     We have audited the accompanying consolidated balance sheets of Thompson
Pipe and Steel Company and subsidiary as of December 31, 1995 and 1994, and the
related consolidated statements of operations and cash flows for each of the
three years in the period ended December 31, 1995. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Thompson Pipe
and Steel Company and subsidiary as of December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
 

                                          /s/ COOPERS & LYBRAND L.L.P.
                                          COOPERS & LYBRAND L.L.P.
 
Denver, Colorado
February 25, 1996, except for Notes 7 and 8,
as to which the date is March 14, 1996
 
                                      F-21
<PAGE>   69
 
                        THOMPSON PIPE AND STEEL COMPANY
 
                          CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                        DECEMBER 31,     DECEMBER 31,
                                                                            1995             1994
                                                          MAY 31,       ------------     ------------
                                                           1996
                                                        -----------
                                                        (UNAUDITED)
<S>                                                     <C>             <C>              <C>
                        ASSETS
Current assets:
  Cash and cash equivalents...........................     $ 1,323         $    68          $   903
  Accounts receivable, less allowance for doubtful
     accounts of $178, $99 and $104 for May 1996,
     December 1995 and December 1994, respectively....       7,134          10,077            7,724
  Costs and estimated earnings in excess of billings
     on uncompleted contracts.........................       2,967           4,369            4,582
  Inventories.........................................       1,940           3,475            5,590
  Deferred income taxes...............................                                          987
  Prepaid expenses and other assets...................          18             204              320
  Net investment in sales-type leases.................         135             135              114
                                                           -------         -------          -------
          Total current assets........................      13,517          18,328           20,220
Net investment in sales-type leases, non-current......         142             201              334
Property, plant and equipment, net....................       5,527           5,346           13,962
Property, plant and equipment, net (held for sale)....       4,089           7,260
Other assets..........................................          30             449              593
                                                           -------         -------          -------
          Total assets................................     $23,305         $31,584          $35,109
                                                           =======         =======          =======
          LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
  Accounts payable....................................     $ 3,057         $ 6,084          $ 4,198
  Taxes payable.......................................          25              24              436
  Accrued payroll and other accrued liabilities.......       4,485           3,003            1,201
  Due to parent and affiliated liabilities............       4,800           3,589            1,668
  Current maturities of long-term debt and capital
     lease obligations................................         767             889              768
                                                           -------         -------          -------
          Total current liabilities...................      13,134          13,589            8,271
Long-term debt, net of current maturities.............       6,110          13,920           12,841
Capital lease obligations, net of current
  maturities..........................................       1,600           1,800            2,039
Due to parent.........................................                                          837
Deferred income taxes.................................                                          433
                                                           -------         -------          -------
          Total liabilities...........................      20,844          29,309           24,421
                                                           -------         -------          -------
Commitments and contingencies (Note 9)
Stockholder's equity:
  Common stock, $.029 par value; 37,083 shares
     authorized, 34,699 issued and outstanding........           1               1                1
Additional paid-in capital............................      14,767           8,000            8,000
Retained earnings (deficit)...........................     (12,214)         (5,585)           2,735
Additional minimum pension liability..................         (93)           (141)             (48)
                                                           -------         -------          -------
          Total stockholder's equity..................       2,461           2,275           10,688
                                                           -------         -------          -------
          Total liabilities and stockholder's
            equity....................................     $23,305         $31,584          $35,109
                                                           =======         =======          =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-22
<PAGE>   70
 
                        THOMPSON PIPE AND STEEL COMPANY
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                             FOR THE FIVE
                                             MONTHS ENDED                  FOR THE YEAR ENDED
                                           -----------------   ------------------------------------------
                                           MAY 31,   MAY 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                            1996      1995         1995           1994           1993
                                           -------   -------   ------------   ------------   ------------
                                              (UNAUDITED)
<S>                                        <C>       <C>       <C>            <C>            <C>
Net sales................................  $10,852   $14,805     $ 37,557       $ 40,368       $ 52,309
Cost of sales............................   13,463    14,175       36,419         36,262         49,586
                                           -------   -------      -------        -------        -------
     Gross profit........................   (2,611)      630        1,138          4,106          2,723
Selling, general and administrative
  expenses...............................    2,640     1,921        4,240          4,558          5,231
Loss on closure of Kentucky plant........      263                  3,142
Restructuring costs......................                                            223
Consulting fees..........................                                            300
                                           -------   -------      -------        -------        -------
Loss from operations.....................   (5,514)   (1,291)      (6,244)          (975)        (2,508)
Interest expense.........................   (1,070)     (839)      (2,080)        (1,920)        (1,371)
Other income (expense)...................      (17)        4          277            151            (43)
                                           -------   -------      -------        -------        -------
Loss before income tax (expense)
  benefit................................   (6,567)   (2,126)      (8,047)        (2,744)        (3,922)
Income tax (expense) benefit.............       14       732         (274)           874          1,300
                                           -------   -------      -------        -------        -------
Net loss.................................  $(6,581)  $(1,394)    $ (8,321)      $ (1,870)      $ (2,622)
                                           =======   =======      =======        =======        =======
</TABLE>
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-23
<PAGE>   71
 
                        THOMPSON PIPE AND STEEL COMPANY
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                           FOR THE FIVE
                                                           MONTHS ENDED                  FOR THE YEAR ENDED
                                                         -----------------   ------------------------------------------
                                                         MAY 31,   MAY 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                                          1996      1995         1995           1994           1993
                                                         -------   -------   ------------   ------------   ------------
                                                            (UNAUDITED)
<S>                                                      <C>       <C>       <C>            <C>            <C>
Cash flows from operating activities:
  Net loss............................................. $(6,581)  $(1,394)    $ (8,321)      $ (1,870)      $ (2,622)
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
    Deferred income taxes..............................              (732)         554           (892)        (1,443)
    Depreciation and amortization......................     740       685        1,638          1,497          1,419
    Gain on sale of property, plant and equipment......    (714)
    Write-down on equipment............................   1,034                    992
    Write-off of deferred facility charges and debt
      costs............................................    (123)                   454
    Write-down of inventory............................      38                    242
    Claim settlement...................................     616                    167
    Other..............................................                                           (35)            20
Changes in assets and liabilities:
  Decrease (increase) in accounts receivable...........   2,943      (632)      (2,349)         4,838         (4,146)
  Decrease (increase) in costs and estimated earnings
    in excess of billings on uncompleted contracts.....   1,402       113          213         (3,993)         1,931
  Decrease (increase) in inventories...................   1,497      (455)       1,874           (273)         4,453
  Decrease (increase) in investment in sales-type
    leases.............................................      59       (89)         113            102           (194)
  Decrease (increase) in prepaid expenses and other
    assets.............................................     443      (314)         210            (52)            58
  Increase (decrease) in accounts payable..............  (3,027)    2,243        1,886          1,162         (4,071)
  Increase (decrease) in accrued payroll, accrued
    liabilities, and pension...........................     866      (500)       1,709           (305)           456
  Increase (decrease) in taxes payable.................       1       (18)        (412)           (75)           134
  Changes in advances due to/due from parent and
    affiliated companies...............................   4,978       300          828          2,121            839
                                                         -------   -------      -------        -------        -------
  Net cash provided by (used in) operating
    activities.........................................   4,172      (793)        (202)         2,225         (3,166)
                                                         -------   -------      -------        -------        -------
Cash flows from investing activities:
  Additions to property, plant and equipment...........    (291)     (768)        (991)        (1,356)        (1,165)
  Proceeds from sale of equipment......................   2,628
                                                         -------   -------      -------        -------        -------
  Net cash provided by (used in) investing
    activities.........................................   2,337      (768)        (991)        (1,356)        (1,165)
Cash flows from financing activities:
  Repayments of bank line of credit....................  (2,389)                               (4,113)        (2,675)
  Proceeds from bank line of credit....................               974        8,470          1,700          8,184
  Principal payments on long-term debt and capital
    lease..............................................  (2,743)     (148)      (7,676)          (874)          (868)
  Proceeds from parent subordinate debt................                                         3,000
  Financing costs paid.................................    (122)     (144)        (693)
  Due to affiliates....................................               117          257
                                                         -------   -------      -------        -------        -------
  Net cash provided by (used in) financing
    activities.........................................  (5,254)      799          358           (287)         4,641
                                                         -------   -------      -------        -------        -------
Net increase (decrease) in cash........................   1,255      (762)        (835)           582            310
Cash and cash equivalents, beginning of year...........      68       903          903            321             11
                                                         -------   -------      -------        -------        -------
Cash and cash equivalents, end of year.................  $1,323    $  141      $    68       $    903       $    321
                                                         =======   =======      =======        =======        =======
Supplemental disclosure of cash flow information
  Interest paid........................................  $  429    $  431      $  ,410       $    902       $  1,233
                                                         =======   =======      =======        =======        =======
</TABLE>
 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
 
     In 1996, a $3.0 million subordinated note payable to an affiliate and $3.8
million due to parent were contributed to capital. In 1995, a note payable of
$167 was issued as a result of the settlement of a contract claim. In 1994, a
note receivable of $50 was recorded resulting from settlement of litigation and
an $8,000 subordinate note payable was contributed to the Company and recorded
as additional paid-in capital.
 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-24
<PAGE>   72
 
                        THOMPSON PIPE AND STEEL COMPANY
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (INFORMATION AS OF MAY 31, 1996 AND FOR THE FIVE MONTHS
                   ENDED MAY 31, 1996 AND 1995 IS UNAUDITED)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
NATURE OF THE BUSINESS
 
     Thompson Pipe and Steel Company (the "Company") is wholly owned by CHL
Holdings, Inc. ("CHL"), which is wholly owned by Inter-City Products Corp.
("ICP"), a Canadian Corporation. The Company is a contract manufacturer of steel
pipe for use in major water systems and propane tanks.
 
     The majority of the Company's business is with contractors who perform
services for various municipalities and government agencies, and perform such
services under bonding arrangements with the agencies. At any point in time, a
small number of customers account for a significant portion of accounts
receivable.
 
     On May 31, 1996, all of the issued and outstanding capital stock of the
Company was acquired by Northwest Pipe Company, a manufacturer of steel pipe
based in Portland, Oregon.
 
CONSOLIDATION
 
     The consolidated financial statements include the accounts of Thompson Pipe
and Steel Company and its wholly owned subsidiary, Thompson Steel Pipe Company
(see Note 2 relative to the closure of Thompson Steel Pipe Company).
Intercompany accounts and transactions have been eliminated.
 
REVENUE RECOGNITION
 
     The Company recognizes long-term contract revenue on the percentage of
completion method. Contract costs include all direct material and labor cost and
those indirect cost related to contract performance. Under absorbed overhead is
accounted for as a period cost. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Revenue
contracts lasting three months or less and sale of propane tanks are recognized
as product is shipped.
 
INVENTORIES
 
     Inventories are stated at the lower of cost, using the weighted moving
average method, or market.
 
PROPERTY, PLANT AND EQUIPMENT
 
     Property, plant and equipment held for use are stated at cost. Property,
plant and equipment held for sale is stated at the lesser of cost or estimated
realizable value. Depreciation is computed using the straight-line method over
the following estimated useful lives:
 
<TABLE>
    <S>                                                                      <C>
    Land improvements......................................................     20 years
    Buildings..............................................................  10-20 years
    Machinery, equipment and furniture.....................................   5-20 years
</TABLE>
 
     Expenditures for maintenance and repairs are charged to expense as
incurred, whereas major improvements are capitalized and depreciated. At the
time of retirement or disposition of depreciable property, the related cost and
accumulated depreciation are removed from the accounts and any resulting gain or
loss is included in operations.
 
OTHER ASSETS
 
     Other assets are stated at cost and consist of deferred costs related to
the financing and construction of the facilities of Thompson Steel Pipe Company.
Management periodically evaluates the net realizability of the
 
                                      F-25
<PAGE>   73
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
carrying amount of such deferred costs. Deferred facility costs are amortized
over five years (written off in 1995), and financing costs are being amortized
over the life of the related debt.
 
WARRANTY PROVISION
 
     The Company provides for future warranty costs based on management's
estimate of the amount necessary to cover all known claims for warranty coverage
plus an amount for future claims which are probable, but as yet are unreported
to the Company. The liability is reduced as actual costs are incurred.
 
INCOME TAXES
 
     The Company's operations are included in the consolidated federal income
tax return filed by CHL. Federal income taxes for the Company are provided on a
separate tax return basis and are payable to CHL under a tax sharing agreement.
Investment tax credits, as determined above, are recorded as a reduction of the
provision for income tax in the year in which such credits are utilized.
Deferred income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates applicable to future years
to differences between the financial statement carrying amounts and the tax
bases of existing assets and liabilities. The effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes the
enactment date.
 
MANAGEMENT ESTIMATES
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Examples of such estimates include, but are not limited to,
the net realizable values of Kentucky related assets (Note 2), deferred tax
assets valuation allowance, pension related assumptions, percentage of
completion revenue calculations, contingent environmental liabilities and
restructuring charges. Actual results could differ from those estimates.
 
CASH AND CASH EQUIVALENTS
 
     The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
 
     The Company maintains substantially all cash and cash equivalents in
Federally insured banks in Denver, Colorado, and Princeton, Kentucky.
 
RESTRUCTURING COSTS
 
     Restructuring costs principally consist of severance expenses incurred
during the Company's downsizing in 1994 and the closure of the Kentucky
manufacturing facility in 1995.
 
INTERIM FINANCIAL STATEMENTS
 
     The financial statements as of May 31, 1996 and for the five months ended
May 31, 1996 and 1995 are unaudited. However, in the opinion of management, the
interim financial statements include all adjustments, consisting only of normal
recurring adjustments considered necessary for a fair presentation of the
Company's financial position, operating results and cash flows. Results of the
interim periods are not necessarily indicative of results to be expected for the
entire year.
 
                                      F-26
<PAGE>   74
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
2.  CLOSURE OF KENTUCKY FACILITY:
 
     Due to recurring losses experienced in Thompson Steel Pipe Company, the
subsidiary's operations were ceased and the manufacturing facility in Princeton,
Kentucky, was closed in August 1995. All contracts in progress at the time of
the closure and certain pipe manufacturing equipment and inventory were
transferred to the Company's Denver facility. Certain inventory related to the
manufacturing of propane tanks was transferred to an unrelated manufacturer of
propane tanks in Mexico (see Note 4 for additional explanation). Certain other
equipment has been sold to third parties, abandoned or is held in Kentucky for
sale.
 
     In connection with the plant closing, the Company recorded the following
significant charges:
 
<TABLE>
    <S>                                                                        <C>
    Severance and benefits...................................................  $  567,154
    Cost of moving equipment to Denver/Mexico................................     168,908
    Write-down of plant and related costs....................................     980,904
    Write off of deferred facility and debt costs............................     453,940
    Write off of abandoned equipment.........................................     362,461
    Write-down of inventory..................................................     242,110
    Other....................................................................     366,421
                                                                               ----------
                                                                               $3,141,898
                                                                               ==========
</TABLE>
 
     Property, plant and equipment held for sale including buildings and
equipment under capital lease were comprised of the following:
 
<TABLE>
<CAPTION>
                                                             MAY 31, 1996     DECEMBER 31, 1995
                                                             ------------     -----------------
    <S>                                                      <C>              <C>
    Land and building......................................   $3,210,653         $ 3,210,653
    Equipment..............................................    2,229,070           6,351,175
                                                              ----------          ----------
                                                               5,439,723           9,561,828
    Accumulated depreciation...............................    1,351,217           2,301,753
                                                              ----------          ----------
                                                              $4,088,506         $ 7,260,075
                                                              ==========          ==========
</TABLE>
 
3.  COSTS AND BILLINGS ON UNCOMPLETED CONTRACTS:
 
     Costs and billings on uncompleted contracts are as follows:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                    MAY 31,       ---------------------------
                                                     1996            1995            1994
                                                  -----------     -----------     -----------
    <S>                                           <C>             <C>             <C>
    Costs and estimated earnings on uncompleted
      contracts.................................  $14,650,842     $29,604,198     $21,539,908
    Billings on uncompleted contracts...........   11,683,414      25,333,670      16,984,870
                                                  -----------     -----------     -----------
                                                  $ 2,967,428     $ 4,270,528     $ 4,555,038
                                                  ===========     ===========     ===========
    Included in the accompanying balance sheets
      under the following captions:.............
      Costs and estimated earnings in excess of
         billings on uncompleted contracts......  $ 2,967,428     $ 4,368,941     $ 4,582,241
      Other accrued liabilities (billings in
         excess of costs and estimated
         earnings)..............................                       98,413          27,203
                                                  -----------     -----------     -----------
                                                  $ 2,967,428     $ 4,270,528     $ 4,555,038
                                                  ===========     ===========     ===========
</TABLE>
 
                                      F-27
<PAGE>   75
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
4.  INVENTORIES:
 
     Major components of inventories are as follows:
 
<TABLE>
<CAPTION>
                                                                          DECEMBER 31,
                                                      MAY 31,       -------------------------
                                                        1996           1995           1994
                                                     ----------     ----------     ----------
    <S>                                              <C>            <C>            <C>
    Available for production:......................
      Raw materials................................  $1,630,394     $2,611,953     $4,387,849
      Work-in-progress.............................     149,409        287,195        920,786
      Finished goods...............................                                   281,693
                                                     ----------     ----------     ----------
                                                      1,799,803      2,899,148      5,590,328
    Finished goods -- propane tanks held for sale
      in Kentucky..................................     149,978         48,127
    Component parts held in Kentucky...............      10,400         21,712
    In transit to third-party propane tank
      manufacturer in Mexico.......................                    505,612
                                                     ----------     ----------     ----------
                                                     $1,940,181     $3,474,599     $5,590,328
                                                     ==========     ==========     ==========
</TABLE>
 
5.  PROPERTY, PLANT AND EQUIPMENT:
 
     Property, plant and equipment held for use (see Note 2 regarding Property,
Plant and Equipment held for sale) by major classifications are as follows:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                    MAY 31,       ---------------------------
                                                     1996            1995            1994
                                                  -----------     -----------     -----------
    <S>                                           <C>             <C>             <C>
    Land and land improvements..................  $ 1,321,234     $ 1,321,234     $ 1,709,267
    Buildings...................................    3,436,922       3,436,922       6,780,040
    Machinery, equipment and furniture..........    8,943,925       8,844,023      15,163,082
                                                  -----------     -----------     -----------
              Total cost........................   13,702,081      13,602,179      23,652,389
    Accumulated depreciation....................   (8,174,986)     (8,255,819)     (9,690,835)
                                                  -----------     -----------     -----------
    Property, plant and equipment, net..........  $ 5,527,095     $ 5,346,360     $13,961,554
                                                  ===========     ===========     ===========
</TABLE>
 
6.  LONG-TERM DEBT:
 
     Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                    MAY 31,       ---------------------------
                                                     1996            1995            1994
                                                  -----------     -----------     -----------
    <S>                                           <C>             <C>             <C>
    Revolving line of credit (see Note 7).......  $ 6,080,912     $ 8,470,404     $ 6,831,000
    Caldwell County, Kentucky, Industrial
      Revenue Bonds (see Note 8)................      500,000       3,000,000       3,600,000
    Promissory notes, payable in installments
      through 1997..............................       79,167         100,000          27,869
    Subordinated note to affiliate, CHL, payable
      at U.S. prime rate plus .5% (prime rate
      8.5% December 31, 1995)...................           --       3,000,000       3,000,000
                                                  -----------     -----------     -----------
                                                    6,660,079      14,570,404      13,458,869
    Less current maturities.....................      550,000         650,000         617,532
                                                  -----------     -----------     -----------
                                                  $ 6,110,079     $13,920,404     $12,841,337
                                                  ===========     ===========     ===========
</TABLE>
 
                                      F-28
<PAGE>   76
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6.  LONG-TERM DEBT, CONTINUED:
     Annual maturities of long-term debt for the five years ending December 31,
are as follows:
 
<TABLE>
    <S>                                                                       <C>
    1996....................................................................  $   650,000
    1997....................................................................    9,120,404
    1998....................................................................      600,000
    1999....................................................................      600,000
    2000....................................................................    3,600,000
                                                                              -----------
                                                                              $14,570,404
                                                                              ===========
</TABLE>
 
     The $3,000,000 loan from CHL is subordinate to all other long-term
obligations of the Company and is payable upon demand after the other debt is
extinguished. Given that the Industrial Revenue Bonds are not expected to be
extinguished until 1997, the CHL debt is classified as long-term.
 
7.  LINE OF CREDIT:
 
     The Company had a $12,700,000 line of credit of which $8,470,404 and
$6,080,912 were outstanding at December 31, 1995 and May 31, 1996, respectively.
Borrowings under the line of credit accrue interest at the prime rate, plus 2.0%
(prime rate was 8.5% and 8.25% at December 31, 1995 and May 31, 1996,
respectively) and are payable on March 8, 1997.
 
     The line of credit is collateralized by all assets, rights, and interests
of the Company and guaranteed by CHL and ICP. The Company is subject to various
restrictive covenants, including maintenance of certain net worth and working
capital ratios, restrictions on issuance of new debt, and payment of dividends.
At December 31, 1995, the Company was in default of the working capital and net
worth covenants.
 
     On March 14, 1996, the Company obtained an amendment to the line of credit
that modified the working capital and net worth covenants so as to allow
compliance at December 31, 1995. The revised covenants will remain in place
until the earlier of the sale of the Company, at which time the borrowings are
due and payable, or June 1, 1996, at which time both covenants will revert to
minimum amounts which are more stringent than the March 14, 1996 revised
amounts. Based on the Company's current projected results for 1996, management
expects to remain in compliance with the amended covenants through May 31, 1996.
However, in the event the Company is not sold prior to June 1, 1996, management
expects the Company will not be in compliance with certain of the amended
covenants. Therefore, the lender has required and ICP has represented that it
will provide the funding as required to meet the amended covenants.
 
8.  INDUSTRIAL REVENUE BONDS:
 
     The Company financed the acquisition of facilities for Thompson Steel Pipe
Company with Industrial Revenue Bonds (the "Caldwell Bonds") on May 1, 1990. The
Caldwell Bond proceeds and related Caldwell Bond Indenture were then assigned to
Thompson Steel Pipe Company. The Caldwell Bonds bear interest at a variable rate
which is determined by the remarketing agent. At December 31, 1995, the variable
rate was 5.6%. The Bonds are subject to redemption and repayment, pursuant to
the terms of the Caldwell Bond Indenture, beginning May 1, 1993, and on each
such payment date thereafter until May 1, 2000. Also, the bonds may be subject
to early redemption by the Company pursuant to the bond terms.
 
     The Kentucky Rural Economic Development Authority (the "KREDA") issued
$2,500,000 of Industrial Revenue Bonds (the "KREDA Bonds") on May 1, 1990. KREDA
leased the facilities acquired with the proceeds to Thompson Steel Pipe Company
under the capital lease described in Note 9 (the "KREDA Lease"). The KREDA Lease
includes a variable interest component which is determined by the remarketing
agent. Principal payments of the KREDA Lease obligation are used to fund the
mandatory sinking fund
 
                                      F-29
<PAGE>   77
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
8.  INDUSTRIAL REVENUE BONDS, CONTINUED:
redemption payments for the KREDA Bonds beginning May 1, 1991, and on each such
payment date thereafter until May 1, 2005.
 
     The Caldwell Bond Indenture and the KREDA Lease require that the trustee
maintain certain trust accounts for the benefit of Caldwell and KREDA. The
trustee invests any excess funds in certain qualified investments as defined in
the bond indenture. The primary funds are described as follows:
 
     - Bond Principal Fund -- The purpose of this fund is to receive required
       payments by the Company, and in turn to pay the principal and any premium
       on the Bonds when due.
 
     - Bond Interest Fund -- The purpose of this fund is to receive required
       payments from the Company for the sole purpose of paying interest due on
       the Bonds.
 
     - Bond Redemption Fund -- The purpose of this fund is to pay the principal
       and interest in the event of early redemption of the Bonds with proceeds
       received from the Bond Principal and Bond Interest Funds.
 
     The Bonds are collateralized by two letters of credit issued by the
Company's revolving line of credit bank on the Company's behalf, equipment and
machinery of Thompson Steel Pipe Company, and a mortgage on the Company's real
property. The letters of credit expire in April 1997. The Company is subject to
letter of credit and alternate letter of credit restrictive covenants similar to
those described in Note 7.
 
     The March 14, 1996 amendment to the line of credit also allowed for the
continuation of these letters of credit until March 8, 1997.
 
9.  LEASE COMMITMENTS:
 
CAPITAL LEASE
 
     As discussed in Note 8, the Company leases certain assets from the KREDA
which were acquired with the proceeds from issuance of the KREDA Bonds.
 
     Future minimum lease payments and the present value of minimum lease
payments for years ending December 31, under the capital lease used to acquire
the Thompson Steel Pipe Company facility and to finance certain computer
equipment are as follows:
 
<TABLE>
    <S>                                                                        <C>
    1996.....................................................................  $  320,913
    1997.....................................................................     271,628
    1998.....................................................................     263,027
    1999.....................................................................     254,428
    2000.....................................................................     245,867
    Thereafter...............................................................   1,040,256
                                                                               ----------
    Total minimum payments...................................................   2,396,119
    Less amount representing interest........................................     356,904
                                                                               ----------
    Present value of net minimum lease payments..............................   2,039,215
    Less current portion.....................................................     239,215
                                                                               ----------
                                                                               $1,800,000
                                                                               ==========
</TABLE>
 
                                      F-30
<PAGE>   78
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9.  LEASE COMMITMENTS, CONTINUED:
OPERATING LEASES
 
     The Company leases office and transportation equipment under operating
leases expiring at various dates through 2000. Upon expiration, the Company
generally has the option to purchase the property at the then fair value of the
property. Future minimum rental payments for the years ending December 31, are
as follows:
 
<TABLE>
    <S>                                                                         <C>
    1996......................................................................  $455,000
    1997......................................................................   350,000
    1998......................................................................   207,000
    1999......................................................................   192,000
    2000......................................................................     1,000
</TABLE>
 
     Total rent expense for all operating leases amounted to approximately
$543,000, $523,000 and $294,000 for the years ended December 31, 1995, 1994 and
1993, respectively.
 
10.  INCOME TAXES:
 
     The components of the provision (benefit) for income taxes are as follows:
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                            MAY 31,   ---------------------------------------
                                             1996       1995          1994           1993
                                            -------   ---------     ---------     -----------
    <S>                                     <C>       <C>           <C>           <C>
    Current...............................  $14,000   $(280,253)    $  18,000     $   111,254
    Deferred..............................              553,852      (892,313)     (1,411,254)
                                            -------   ---------     ---------     -----------
                                            $14,000   $ 273,599     $(874,313)    $(1,300,000)
                                            =======   =========     =========     ===========
</TABLE>
 
     At December 31, 1995, the Company's deferred tax assets totaled $4,560,111,
deferred tax liabilities totaled $1,414,586, and a deferred tax asset valuation
allowance for $3,145,525 resulting in no net deferred tax assets or liabilities.
These differences principally relate to net operating loss (NOL) carryforwards,
the use of accelerated depreciation for tax return purposes and the accrual of
estimated liabilities for financial statement purposes.
 
     Taxes currently payable/receivable are included in advances due to/from
parent and affiliated companies.
 
     The difference between the federal statutory rate of 34% and the effective
tax rate is primarily due to recording a valuation account for the tax assets in
excess of deferred tax liabilities. Tax NOL carryforwards approximating
$12,083,000 attributable to the Company are available for inclusion in the CHL
consolidated return, and expire at varying dates through 2010 if not utilized.
 
11.  CHANGES IN STOCKHOLDER'S EQUITY:
 
     Effective December 31, 1994, the Company's parent, CHL, contributed an $8
million subordinate note to additional paid-in capital.
 
     In connection with the Union Pension Plan, the Company has recognized an
additional minimum pension liability at December 31, 1995 and 1994 of $140,878
and $47,482, net of income tax of $86,000 and $28,705, respectively. This
additional minimum liability has been recorded as a separate component of
stockholder's equity.
 
                                      F-31
<PAGE>   79
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  PENSION PLANS:
 
     The Company has two noncontributory defined benefit pension plans which
cover substantially all employees. Benefits under the Union Pension Plan are
based upon a flat benefit formula, while benefits under the Company's Retirement
Plan are based upon a final pay formula.
 
     The funding policy for each plan is based on current plan costs plus
amortization of the unfunded plan liability. The following tables set forth the
net periodic pension cost and the funded status of the plans as of December 31,
1995, 1994 and 1993:
 
<TABLE>
<CAPTION>
                                                                            1995
                                                                  -------------------------
                                                                                   UNION
                                                                  RETIREMENT      PENSION
                                                                     PLAN           PLAN
                                                                  ----------     ----------
    <S>                                                           <C>            <C>
    Details of pension cost:
      Service cost-benefits earned during the period............  $   45,944     $   42,239
      Interest cost on projected benefit obligation.............     168,054         79,599
      Return on plan assets.....................................    (228,927)      (121,686)
      Net amortization and deferral.............................     105,222         56,542
                                                                  ----------     ----------
      Pension cost..............................................  $   90,293     $   56,694
                                                                  ==========     ==========
    Funded status of the plans:
      Accumulated benefit obligation, including vested benefits
         of $2,004,507 and $1,016,008, respectively.............  $2,028,180     $1,081,371
                                                                  ==========     ==========
    Plan assets at fair value, primarily equity and fixed income
      securities................................................  $1,875,231     $  901,003
    Less projected benefit obligation...........................   2,172,131      1,081,371
                                                                  ----------     ----------
    Benefit obligation in excess of plan assets.................    (296,900)      (180,368)
    Plus unrecognized transition obligation.....................      25,021          4,709
    Plus recognition of additional minimum liability............    (148,074)      (107,345)
    Less unrecognized net loss..................................     267,004        102,636
                                                                  ----------     ----------
    Accrued pension cost........................................  $ (152,949)    $ (180,368)
                                                                  ==========     ==========
    Actuarial assumptions:
      Weighted average discount rate............................        7.75%          7.75%
      Expected long-term rate of return on plan assets..........        8.00%          8.00%
      Rate of increase in future compensation level.............        4.50%           N/A
</TABLE>
 
                                      F-32
<PAGE>   80
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  PENSION PLANS, CONTINUED:
 
<TABLE>
<CAPTION>
                                                                            1994
                                                                  ------------------------
                                                                                   UNION
                                                                  RETIREMENT      PENSION
                                                                     PLAN          PLAN
                                                                  ----------     ---------
    <S>                                                           <C>            <C>
    Details of pension cost:
      Service cost-benefits earned during the period............  $   51,297     $  46,784
      Interest cost on projected benefit obligation.............     137,430        68,890
      Return on plan assets.....................................      53,021        38,397
      Net amortization and deferral.............................    (198,937)     (111,247)
                                                                  ----------     ---------
      Pension cost..............................................  $   42,811     $  42,824
                                                                  ==========     =========
    Funded status of the plans:
      Accumulated benefit obligation, including vested benefits
         of $1,628,603 and $852,932, respectively...............  $1,694,509     $ 922,470
                                                                  ==========     =========
    Plan assets at fair value, primarily equity and fixed income
      securities................................................  $1,704,557     $ 824,101
    Less projected benefit obligation...........................   1,782,469       922,470
                                                                  ----------     ---------
    Plan assets less than projected benefit obligation..........     (77,912)      (98,369)
    Plus unrecognized transition obligation.....................      29,192         5,493
    Plus recognition of additional minimum liability............                   (82,040)
    Less unrecognized net loss..................................     130,412        76,547
                                                                  ----------     ---------
    Prepaid (accrued) pension cost..............................  $   81,692     $ (98,369)
                                                                  ==========     =========
    Actuarial assumptions:
      Weighted average discount rate............................         8.5%          8.5%
      Expected long-term rate of return on plan assets..........         8.0%          8.0%
      Rate of increase in future compensation level.............         4.0%          N/A
</TABLE>
 
                                      F-33
<PAGE>   81
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
12.  PENSION PLANS, CONTINUED:
 
<TABLE>
<CAPTION>
                                                                            1993
                                                                   -----------------------
                                                                                   UNION
                                                                   RETIREMENT     PENSION
                                                                      PLAN          PLAN
                                                                   ----------     --------
    <S>                                                            <C>            <C>
    Details of pension cost:
      Service cost-benefits earned during the period.............  $   46,489     $ 40,249
      Interest cost on projected benefit obligation..............     153,494       69,674
      Return on plan assets......................................    (127,179)     (47,600)
      Net amortization and deferral..............................     (18,434)     (25,947)
                                                                   ----------     --------
      Pension cost...............................................  $   54,370     $ 36,376
                                                                   ==========     ========
    Funded status of the plans:
      Accumulated benefit obligation, including vested benefits
         of $1,676,711 and $904,422, respectively................  $1,707,909     $984,082
                                                                   ==========     ========
    Plan assets at fair value, primarily equity and fixed income
      securities.................................................  $1,876,083     $920,423
    Less projected benefit obligation............................   1,824,238      984,082
                                                                   ----------     --------
    Plan assets in excess of (less than) projected benefit
      obligation.................................................      51,845      (63,659)
    Plus unrecognized transition obligation......................      33,363        6,277
    Plus recognition of additional minimum liability.............                  (90,154)
    Less unrecognized net loss...................................      22,372       83,877
                                                                   ----------     --------
    Prepaid (accrued) pension cost...............................  $  107,580     $(63,659)
                                                                   ==========     ========
    Actuarial assumptions:
      Weighted average discount rate.............................         7.5%         7.5%
      Expected long-term rate of return on plan assets...........         8.0%         8.0%
      Rate of increase in future compensation level..............         4.0%         N/A
</TABLE>
 
13.  RELATED PARTY TRANSACTIONS:
 
     The Company is a member of a group of affiliated companies, substantially
all of which are direct or indirect subsidiaries of ICP. The Company is charged
a management fee for certain administrative and operational support services
which amounted to $224,259, $286,966 and $335,456 for the years ended December
31, 1995, 1994 and 1993, respectively. ICP also provides risk management
services for the Company. These services resulted in expense of $484,030,
$513,000 and $790,000 in 1995, 1994 and 1993, respectively. In addition, the
Company reimburses an affiliate for salary and other expenses of certain
individuals. The amount expensed for such reimbursement for 1995, 1994 and 1993
was $205,062, $279,911 and $204,000, respectively.
 
     Interest expense on loans with related parties approximated $279,000,
$793,000 and $568,000 for the years ended December 31, 1995, 1994 and 1993,
respectively.
 
                                      F-34
<PAGE>   82
 
                        THOMPSON PIPE AND STEEL COMPANY
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
13.  RELATED PARTY TRANSACTIONS, CONTINUED:
     Certain members of management are covered under a long-term incentive plan
of ICP. Under the plan, long-term incentive compensation units may be granted,
the value of which shall be determined by reference to the appreciation in the
market value of ICP ordinary shares over stated periods of time. Based on the
discretion of the ICP Board of Directors, the appreciation in the market value
of the ordinary shares will be distributed to the holder thereof by payment of
cash, issuance of ICP ordinary shares or a combination thereof. Amounts expensed
for the plan for 1995, 1994 and 1993 were insignificant.
 
     The Company's common stock has been pledged to guarantee the borrowings of
CHL under a line of credit agreement between CHL and a third party.
 
14.  ENVIRONMENTAL LIABILITIES:
 
     The Company has been involved in paying the costs of assessing the extent
of, and remediating, environmental contamination at its Denver and Kentucky
facilities. The estimated costs to remediate after December 31, 1995 is expected
to be less than $100,000. Actual results could differ from those estimates.
 
                                      F-35
<PAGE>   83
 
                             NORTHWEST PIPE COMPANY
 
                        THOMPSON PIPE AND STEEL COMPANY
 
                  PRO FORMA COMBINED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
 
   
     Northwest Pipe Company acquired all of the issued and outstanding capital
stock of Thompson Pipe and Steel Company headquartered in Denver, Colorado on
May 31, 1996. The acquisition was financed by bank borrowings and cash on hand.
The acquisition was accounted for using the purchase method of accounting. The
unaudited pro forma combined statements of operations for the year ended
December 31, 1995 and the nine months ended September 30, 1996 were prepared as
if the acquisition had occurred at the beginning of the respective periods.
    
 
     In the opinion of management of Northwest Pipe Company, all adjustments
necessary to present fairly such pro forma combined statements of operations
have been made based on the terms and structure of the transaction. These
unaudited combined statements of operations are not necessarily indicative of
what actual results would have been had the transactions occurred at the
beginning of the respective periods nor do they purport to indicate the results
of future operations of the Company.
 
     These unaudited pro forma combined statements of operations should be read
in conjunction with the accompanying notes and the historical financial
statements and notes thereto of Northwest Pipe Company and Thompson Pipe and
Steel Company, included elsewhere in this Prospectus.
 
                                      F-36
<PAGE>   84
 
                             NORTHWEST PIPE COMPANY
 
                   PRO FORMA COMBINED STATEMENT OF OPERATIONS
   
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
    
   
     (DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
    
                                  (UNAUDITED)
 
   
<TABLE>
<CAPTION>
                                                             THOMPSON                         NORTHWEST
                                              NORTHWEST      PIPE AND                            PIPE
                                                 PIPE          STEEL                           COMPANY
                                               COMPANY        COMPANY      ADJUSTMENTS        PRO FORMA
                                              ----------     ---------     ------------       ----------
<S>                                           <C>            <C>           <C>                <C>
Net sales....................................  $ 102,449      $10,852                          $113,301
Cost of sales................................     79,214       13,463         $  (25)(2a)        92,652
                                               ---------      -------         ------           --------
  Gross profit...............................     23,235       (2,611)            25             20,649
Selling, general and administrative
  expenses...................................      8,229        2,623                            10,852
Loss on closure of Kentucky Plant............                     263                               263
                                               ---------      -------         ------           --------
Operating income.............................     15,006       (5,497)            25              9,534
Interest expense.............................      1,424        1,070            105(2b)          2,599
Interest expense to related parties..........        173                                            173
                                               ---------      -------         ------           --------
Income (loss) before income taxes............     13,409       (6,567)           (80)             6,762
Provision for (benefit from) income taxes....      5,363           14         (2,707)(2c)         2,670
                                               ---------      -------         ------           --------
  Net income (loss)..........................  $   8,046      $(6,581)        $2,627           $  4,092
                                               =========      =======         ======           ========
Net income per share.........................  $    1.45                                       $   0.74
                                               =========                                       ========
Shares used in per share calculation.........      5,537                                          5,537
                                               =========                                       ========
</TABLE>
    
 
   
     The accompanying notes are an integral part of this pro forma combined
                                   statement.
    
 
                                      F-37
<PAGE>   85
 
                             NORTHWEST PIPE COMPANY
 
                   PRO FORMA COMBINED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1995
   
     (DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
    
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                             THOMPSON                         NORTHWEST
                                              NORTHWEST      PIPE AND                            PIPE
                                                 PIPE          STEEL                           COMPANY
                                               COMPANY        COMPANY      ADJUSTMENTS        PRO FORMA
                                              ----------     ---------     ------------       ----------
<S>                                           <C>            <C>           <C>                <C>
Net sales....................................  $ 97,715       $37,557                          $135,272
Cost of Sales................................    78,139        36,419         $  (88)(2a)       114,470
                                               --------       -------         ------           --------
  Gross profit...............................    19,576         1,138             88             20,802
Selling, general and administrative
  expenses...................................     7,798         3,963                            11,761
Loss on closure of Kentucky Plant............                   3,142                             3,142
                                               --------       -------         ------           --------
Operating income (loss)......................    11,778        (5,967)            88              5,899
Interest expense.............................     2,839         2,080            313(2b)          5,232
Interest expense to related parties..........       609                                             609
                                               --------       -------         ------           --------
Income (loss) before income taxes............     8,330        (8,047)          (225)                58
Provision for (benefit from) income taxes....     3,223           274         (3,485)(2c)            12
                                               --------       -------         ------           --------
  Income (loss)..............................  $  5,107       $(8,321)        $3,260           $     46
                                               ========       =======         ======           ========
Net income per share.........................  $   1.43                                        $   0.06
                                               ========                                        ========
Shares used in per share calculation.........     3,695                                           3,695
                                               ========                                        ========
</TABLE>
 
   
    The accompanying notes are an integral part of these pro forma combined
                                  statements.
    
 
                                      F-38
<PAGE>   86
 
                             NORTHWEST PIPE COMPANY
 
   
            FOOTNOTES TO PRO FORMA COMBINED STATEMENTS OF OPERATIONS
    
                                  (UNAUDITED)
                                 (IN THOUSANDS)
 
1. BASIS OF PRESENTATION
 
     The accompanying unaudited pro forma financial statements have been
prepared to present the effect of the acquisition by the Company of Thompson
Pipe and Steel Company ("Thompson"). The pro forma financial statements have
been prepared based upon the historical financial statements of the Company and
Thompson as if the acquisition had occurred at the beginning of each of the
respective reporting periods.
 
2. PRO FORMA ADJUSTMENTS
 
     (a) To record the decrease in depreciation expense related to the
adjustment of fixed assets to the estimated fair value at the acquisition date.
 
     (b) To record interest expense related to the additional debt resulting
from the acquisition of Thompson.
 
     (c) Income tax expense (benefit) was adjusted as follows:
 
   
<TABLE>
<CAPTION>
                                                                 NINE MONTHS
                                                                    ENDED           YEAR ENDED
                                                                SEPTEMBER 30,      DECEMBER 31,
                                                                     1996              1995
                                                                --------------     ------------
    <S>                                                         <C>                <C>
    To record tax expense related to decreased depreciation
      expense...............................................       $     10          $     18
    To record tax benefit related to additional interest
      expense...............................................            (40)              (66)
    To record tax benefit related to Thompson's net loss....         (2,677)           (3,437)
                                                                   --------          --------
                                                                   $ (2,707)         $ (3,485)
                                                                   ========          ========
</TABLE>
    
 
                                      F-39
<PAGE>   87
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
 
  NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, ANY SELLING SHAREHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OR ANY OFFER TO BUY, COMMON
STOCK IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Prospectus Summary....................    3
Risk Factors..........................    8
Use of Proceeds.......................   14
Dividend Policy.......................   14
Price Range of Common Stock...........   14
Capitalization........................   15
Selected Financial Data...............   16
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   17
Business..............................   24
Management............................   34
Certain Transactions..................   40
Principal and Selling Shareholders....   41
Description of Capital Stock..........   42
Shares Eligible for Future Sale.......   44
Underwriting..........................   45
Legal Matters.........................   46
Experts...............................   46
Additional Information................   46
Index to Financial Statements.........  F-1
</TABLE>
    

- -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- 
- -------------------------------------------------------------------------------
- ------------------------------------------------------------------------------- 
                                2,400,000 SHARES
 
                         [NORTHWEST PIPE COMPANY LOGO]
 
                                  COMMON STOCK
                            ------------------------
 
                                   PROSPECTUS
   
                            ------------------------
    
                              HANIFEN, IMHOFF INC.
 
                                 STEPHENS INC.
 
                             JENSEN SECURITIES CO.
   
                                            , 1996
    
 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>   88
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
     The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, expected to be incurred by the
Registrant in connection with the offering described in this Registration
Statement. All amounts, except the SEC registration fee, the NASD filing fee and
the Nasdaq National Market listing fee are estimates.
 
<TABLE>
        <S>                                                                 <C>
        SEC Registration Fee..............................................  $ 16,360
        NASD Filing Fee...................................................     5,899
        NASDAQ Listing Fee................................................    17,500
        Printing and Engraving Expenses...................................    75,000
        Accounting Fees and Expenses......................................    50,000
        Directors and Officers Insurance..................................    60,000
        Legal Fees and Expenses...........................................    75,000
        Blue Sky Fees and Expenses (including fees of Counsel)............    10,000
        Transfer Agent and Registrar Fees.................................    10,000
        Miscellaneous Expenses............................................    80,141
                                                                              ------
                  Total...................................................  $400,000
                                                                              ======
</TABLE>
 
   
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.
    
 
     As an Oregon corporation the Company is subject to the Oregon Business
Corporation Act ("OBCA") and the exculpation from liability and indemnification
provisions contained therein. Pursuant to Section 60.047(2)(d) of the OBCA,
Article IV of the Company's Restated Articles of Incorporation (the "Articles")
eliminates the liability of the Company's directors to the Company or its
stockholders, except for any liability related to breach of the duty of loyalty,
actions not in good faith and certain other liabilities.
 
     Section 60.387 et seq. of the OBCA allows corporations to indemnify their
directors and officers against liability where the director or officer has acted
in good faith and with a reasonable belief that actions taken were in the best
interests of the corporation or at least not adverse to the corporation's best
interests and, if in a criminal proceeding, the individual had no reasonable
cause to believe the conduct in question was unlawful. Under the OBCA,
corporations may not indemnify against liability in connection with a claim by
or in the right of the corporation but may indemnify against the reasonable
expenses associated with such claims. Corporations may not indemnify against
breaches of the duty of loyalty. The OBCA provides for mandatory indemnification
of directors against all reasonable expenses incurred in the successful defense
of any claim made or threatened whether or not such claim was by or in the right
of the corporation. Finally, a court may order indemnification if it determines
that the director or officer is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances whether or not the
director or officer met the good faith and reasonable belief standards of
conduct set out in the statute.
 
     The OBCA also provides that the statutory indemnification provisions are
not deemed exclusive of any other rights to which directors or officers may be
entitled under a corporation's articles of incorporation or bylaws, any
agreement, general or specific action of the board of directors, vote of
stockholders or otherwise.
 
     The Articles require the Company to indemnify its directors and officers to
the fullest extent not prohibited by law. The First Restated Bylaws of the
Company (the "Bylaws") also require the Company to indemnify its directors and
officers to the fullest extent permitted by the OBCA. In addition, the Bylaws
deem that all rights to indemnification under the Bylaws are deemed to be
contractual rights and are to be effective to the same extent as if provided for
in a contract between the Company and the director or officer who serves in such
capacity.
 
                                      II-1
<PAGE>   89
 
     Effective as of August 8, 1995, the Company entered into indemnity
agreements with each executive officer of the Company and each member of the
Company's Board of Directors. These indemnity agreements provide for
indemnification of the indemnitee to the fullest extent allowed by law.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.
 
     Within the last three years, the Company has sold securities without
registration under the Securities Act of 1933, as amended (the "Act") in the
transactions described below.
 
     On April 29, 1994, the company issued and sold $1,500,000 in aggregate
principal amount of Series C Convertible Subordinated Debentures to Interven II,
L.P., Interven Ventures 1987, Norwest Growth Fund, Inc., Poppers Supply Company,
James R. Moore, George R. Francis, Arthur D. Johnson, Trustee, W.H. Kilkenny
Company, William H. Kinsey, Virgil C. Vandenburg, William R. Tagmyer, Brian W.
Dunham, Gary A. Stokes and Charles L. Koenig. The Company believes that each of
the purchasers was an "accredited investor" within the meaning of Rule 501 under
Regulation D of the Act and that the offer and sale of the securities was exempt
from registration under Regulation D and Section 4(2) of the Act.
 
     In December 1995, upon the consummation of the Company's initial public
offering, the Company's then outstanding Series B and Series C Convertible
Subordinated Debentures were automatically converted into 2,629,296 shares of
Common Stock. The Company believes that each of the holders of the Series B and
Series C Convertible Subordinated Debentures was an "accredited investor" within
the meaning of Rule 501 under Regulation D of the Act and that the issuance of
Common Stock upon conversion of such Debentures was exempt from registration
under Regulation O and Section 4(2) of the Act.
 
     Within the last three years, the Company has issued options to purchase an
aggregate of 210,184 shares of Common Stock and has sold an aggregate of 36,764
shares of Common Stock for an aggregate purchase price of $40,881, in each case
pursuant to the Company's stock option plans and in reliance on Rule 701
promulgated under the Act.
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
     (a) Exhibits
 
   
<TABLE>
<CAPTION>
NUMBER                                       DESCRIPTION
- ------   ------------------------------------------------------------------------------------
<S>      <C>
 1.0     Form of Underwriting Agreement
 3.1     Second Restated Articles of Incorporation Northwest Pipe Company*
 3.2     Second Amended and Restated Bylaws of Northwest Pipe Company*
 5.0     Opinion of Ater Wynne Hewitt Dodson & Skerritt as to the legality of the securities
         being registered++
10.1     Form of Indemnity Agreement between Northwest Pipe Company and each of its executive
         officers and directors*
10.2     1986 Incentive Stock Option Plan*
10.3     1995 Stock Incentive Plan*
10.4     1995 Stock Option Plan for Nonemployee Directors*
10.5     Lease Agreement between Northwest Pipe & Casing Company and Multnomah Land &
         Equipment Company, as amended*
10.6     Registration Rights Agreement*
10.7     Loan Agreement dated May 1, 1990 between the Company and California Statewide
         Communities Development Authority*
10.8     Stock Purchase Agreement dated as of May 8, 1996 among Northwest Pipe Company,
         Thompson Pipe and Steel Company, CHL Holdings, Inc. and Inter-City Products
         Corporation.+
10.9     Amended and Restated Financing Agreement dated as of May 31, 1996 among The CIT
         Group/Business Credit, Inc., Northwest Pipe Company, Thompson Pipe and Steel Company
         and Thompson Steel Pipe Company.+
</TABLE>
    
 
                                      II-2
<PAGE>   90
 
   
<TABLE>
<CAPTION>
NUMBER                                       DESCRIPTION
- ------   ------------------------------------------------------------------------------------
<S>      <C>
11.0     Computation of Net Income Per Share
24.1     Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in legal opinion filed
         as Exhibit 5.0)++
24.2     Consent of Coopers & Lybrand L.L.P.
24.3     Consent of Environmental Strategies Corporation++
24.4     Consent of Coopers & Lybrand L.L.P.
25.0     Powers of Attorney++
</TABLE>
    
 
     (b) Financial Statement Schedules
 
         Schedule VIII -- Valuation and Qualifying Accounts
- ---------------
 * Incorporated by reference to the Company's Registration Statement on Form S-1
(Registration No. 33-97308).
 
 + Incorporated by reference to the Company's Report on Form 8-K as filed with
the Commission on June 14, 1996.
 
   
++ Previously filed.
    
 
ITEM 17.  UNDERTAKINGS.
 
     (a) The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
 
     (b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
     (c) The undersigned registrant hereby undertakes that:
 
          (1) For purposes of determining any liability under the Securities Act
     of 1933, the information omitted from the form of prospectus filed as part
     of this registration statement in reliance upon Rule 430A and contained in
     a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.
 
          (2) For the purpose of determining any liability under the Securities
     Act of 1933, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.
 
                                      II-3
<PAGE>   91
 
                                   SIGNATURES
 
   
     Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Portland,
State of Oregon, on the 17th day of October, 1996.
    
 
                                          NORTHWEST PIPE COMPANY
 
   
                                          By: /s/  WILLIAM R. TAGMYER
    
                                            ------------------------------------
                                            William R. Tagmyer
                                            President and Chief Executive
                                              Officer
 
   
     Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been duly signed by the following persons in
the capacities indicated on October 17, 1996.
    
 
   
<TABLE>
<CAPTION>
                SIGNATURE                               TITLE
- ------------------------------------------  ------------------------------
<S>                                         <C>                            
     /s/  WILLIAM R. TAGMYER                Chairman of the Board,
- ------------------------------------------  President and Chief Executive
William R. Tagmyer                          Officer (Principal Executive
                                            Officer)

       /s/  BRIAN W. DUNHAM                 Director, Executive Vice
- ------------------------------------------  President and Chief Financial
Brian W. Dunham                             Officer (Principal Financial
                                            Officer)

                        *                   Director
- ------------------------------------------
Wayne B. Kingsley

                        *                   Director
- ------------------------------------------
Vern B. Ryles, Jr.

                        *                   Director
- ------------------------------------------
Warren K. Kearns

                        *                   Director
- ------------------------------------------
Neil R. Thornton

*By:     /s/  BRIAN W. DUNHAM
     -------------------------------------
     Brian W. Dunham
     Attorney-in-fact
</TABLE>
    
 
                                      II-4
<PAGE>   92
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
     In connection with our audits of the financial statements of Northwest Pipe
Company as of December 31, 1995 and 1994 and for each of the three years in the
period ended December 31, 1995, which financial statements are included in the
Prospectus, we have also audited the financial statement schedule included on
page S-2 herein.
 
     In our opinion, this financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
 

                                          /s/ COOPERS & LYBRAND L.L.P.
                                          COOPERS & LYBRAND L.L.P.
 
February 13, 1996
Portland, Oregon
 
                                       S-1
<PAGE>   93
 
                                                                     SCHEDULE II
 
                             NORTHWEST PIPE COMPANY
 
                       VALUATION AND QUALIFYING ACCOUNTS
                         (DOLLAR AMOUNTS IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                   CHARGED
                                                                     TO
                                                    BALANCE AT     PROFIT      DEDUCTIONS     BALANCE AT
                                                    BEGINNING        AND          FROM          CLOSE
                                                    OF PERIOD       LOSS        RESERVES      OF PERIOD
                                                    ----------     -------     ----------     ----------
<S>                                                 <C>            <C>         <C>            <C>
Year ended December 31, 1995:
  Reserve deducted in balance sheet from the asset
     to which it applies --
  Allowance for doubtful trade receivables........     $571         $ 427         $131           $867
                                                       ====         =====         ====           ====
Year ended December 31, 1994:
  Reserve deducted in balance sheet from the asset
     to which it applies --
  Allowance for doubtful receivables..............     $536         $  35         $ --           $571
                                                       ====         =====         ====           ====
Year ended December 31, 1993:
  Reserve deducted in balance sheet from the asset
     to which it applies --
  Allowance for doubtful receivables..............     $887         $(286)        $ 65           $536
                                                       ====         =====         ====           ====
</TABLE>
 
                                       S-2
<PAGE>   94
 
                                 EXHIBIT INDEX
 
   
<TABLE>
<CAPTION>
                                                                                 SEQUENTIALLY
EXHIBIT                                                                            NUMBERED
NUMBER                                    EXHIBIT                                    PAGE
- -------     -------------------------------------------------------------------  ------------
<C>         <S>                                                                  <C>
    1.0     Form of Underwriting Agreement
    3.1     Second Restated Articles of Incorporation Northwest Pipe Company*
    3.2     Second Amended and Restated Bylaws of Northwest Pipe Company*
    5.0     Opinion of Ater Wynne Hewitt Dodson & Skerritt as to the legality
            of the securities being registered++
   10.1     Form of Indemnity Agreement between Northwest Pipe Company and each
            of its executive officers and directors*
   10.2     1986 Incentive Stock Option Plan*
   10.3     1995 Stock Incentive Plan*
   10.4     1995 Stock Option Plan for Nonemployee Directors*
   10.5     Lease Agreement between Northwest Pipe & Casing Company and
            Multnomah Land & Equipment Company, as amended*
   10.6     Registration Rights Agreement*
   10.7     Loan Agreement dated May 1, 1990 between the Company and California
            Statewide Communities Development Authority*
   10.8     Stock Purchase Agreement dated as of May 8, 1996 among Northwest
            Pipe Company, Thompson Pipe and Steel Company, CHL Holdings, Inc.
            and Inter-City Products Corporation.+
   10.9     Amended and Restated Financing Agreement dated as of May 31, 1996
            among the CIT Group/Business Credit, Inc., Northwest Pipe Company,
            Thompson Pipe and Steel Company and Thompson Steel Pipe Company.+
   11.0     Computation of Net Income Per Share
   24.1     Consent of Ater Wynne Hewitt Dodson & Skerritt, LLP (included in
            legal opinion filed as Exhibit 5.0)++
   24.2     Consent of Coopers & Lybrand L.L.P.
   24.3     Consent of Environmental Strategies Corporation++
   24.4     Consent of Coopers & Lybrand L.L.P.
   25.0     Powers of Attorney++
</TABLE>
    
 
- ---------------
 * Incorporated by reference to the Company's Registration Statement on Form S-1
   (Registration No. 33-97308).
 
 + Incorporated by reference to the Company's Report on Form 8-K (as filed with
   the Commission on June 14, 1996).
 
   
++ Previously filed.
    

<PAGE>   1


                        2,400,000 Shares of Common Stock

                             Northwest Pipe Company

                             UNDERWRITING AGREEMENT

_________, 1996

Hanifen, Imhoff Inc.
Stephens Inc.
Jensen Securities Co.
1125 17th Street, Suite 1600
Denver, Colorado 80202

Ladies and Gentlemen:

       Northwest Pipe Company (the "Company"), confirms its agreement to issue
and sell to you (the "Underwriters") an aggregate of 1,200,000 shares (the
"Company Firm Shares") of the Company's Common Stock, $0.01 par value per share
(the "Common Stock").  Moreover, certain stockholders of the Company named in
Schedule B hereto (the "Selling Stockholders") severally propose to sell to the
Underwriters an aggregate of 1,200,000 shares of the Common Stock (the
"Stockholder Shares").  The Company Firm Shares and the Stockholder Shares are
hereinafter collectively referred to as the "Firm Shares."  The respective
amounts of the Firm Shares to be purchased by the several Underwriters are set
forth opposite their names in Schedule A.  In addition, for the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, the
Company and one of the Selling Stockholders confirm their agreement to grant to
the Underwriters an option to purchase up to an additional 360,000 shares of
Common Stock (the "Option Shares").  The Option Shares shall consist of 191,292
shares of Common Stock to be issued by the Company and 168,708 shares of Common
Stock to be sold by a Selling Stockholder as indicated on Schedule B.  If not
all of the Option Shares are purchased, the Option Shares offered by such
Selling Stockholder shall be purchased in their entirety prior to the purchase
of any of the Option Shares offered by the Company.  The Firm Shares and any
Option Shares purchased pursuant to this Agreement are hereinafter referred to
as the "Shares."  The Company and the Selling Stockholders are hereinafter
collectively referred to as the "Sellers." In consideration of the mutual
agreements contained herein and of the interests of the parties in the
transactions contemplated hereby, the parties hereto hereby agree as follows:





<PAGE>   2
       1.     Representations and Warranties of the Company.  In order to
induce the Underwriters to enter into this Agreement, the Company represents
and warrants to each Underwriter that:

       (a)    A registration statement on Form S-1 (File No. 333-13209 with
respect to the Shares has been prepared by the Company and its directors in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act") and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") promulgated thereunder
and has been filed with the Commission.  Copies of such registration statement
and all forms of the prospectuses included therein and the exhibits, financial
statements and schedules thereto, as finally amended and revised, have
heretofore been delivered by the Company to the Underwriters.  Such
registration statement, and the prospectus therein, Part II thereof, any
documents incorporated by reference therein, and all financial schedules and
exhibits thereto, as amended at the time when it shall become effective, and
including all information omitted therefrom in reliance upon Rule 430A of the
Rules and Regulations is hereinafter referred to as the "Registration
Statement." Such Registration Statement has been declared effective under the
Act and no post-effective amendment to the Registration Statement has been
filed as of the date of this Agreement.  No stop order suspending the
effectiveness of the Registration Statement has been issued and no proceeding
for that purpose has been instituted or threatened by the Commission.  The
prospectus included as part of the Registration Statement on file with the
Commission when it shall become effective or, if the procedure in Rule 430A of
the Rules and Regulations is followed, the prospectus that discloses all the
information that was omitted from the prospectus on the effective date pursuant
to such Rule, and in either case, together with any changes contained in any
prospectus filed with the Commission by the Company after the effective date of
the Registration Statement, is hereinafter referred to as the "Prospectus."
Each prospectus included in the Registration Statement and any amendments
thereto prior to the effective date of the Registration Statement or which is
filed with the Commission pursuant to Rule 424(a) of the Rules and Regulations
is referred to herein as a "Preliminary Prospectus."

       (b)    No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission and no proceedings have been
instituted for that purpose; each Preliminary Prospectus, at the time of filing
thereof, (a) conformed in all material respects to the requirements of the Act
and the Rules and Regulations and (b) did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

       (c)    As of the time it became or will become effective, as the case
may be, and at all times subsequent thereto, the Registration Statement and any
post-effective amendment thereto and the Prospectus and any supplement thereto
conformed and will conform in all material respects with the requirements of
the Act and the Rules and Regulations.  Neither the Registration Statement nor
any amendment thereto, and neither the Prospectus nor any



                                        
                                      2
<PAGE>   3
supplement thereto, at the time the Registration Statement or any amendment
thereto became or will become effective, and, with respect to the Prospectus or
any supplement thereto, at the effective date, the date the Prospectus or any
supplement is filed with the Commission and at each Closing Date (as such term
is defined below), contained or will contain, as the case may be, any untrue
statement of a material fact or omitted or will omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading.

       (d)    Other than the subsidiaries listed on Exhibit 21 to Item 16(a) of
the Registration Statement (the "Subsidiaries"), the Company does not have any
beneficial or record ownership of, or control, any corporation, partnership,
joint venture, limited liability company, unincorporated association or other
entity.  All of the issued shares of capital stock of each Subsidiary have been
duly authorized and validly issued and are fully paid and non- assessable and,
except as otherwise disclosed in the Registration Statement, are owned
beneficially and of record by the Company free and clear of all liens, claims,
equities, or other encumbrances of any kind whatsoever.

       (e)    There are no contracts, leases, indentures, instruments or other
documents which are required by the Act and the Rules and Regulations to be
filed as exhibits to the Registration Statement or described in the Prospectus
which have not been so filed or described.  All such contracts and other
documents to which the Company is a party have been duly authorized, executed
and delivered by the Company, constitute valid and binding agreements of the
Company and are enforceable by and against the Company in accordance with the
terms thereof.  Neither the Company, nor, to the Company's knowledge, any other
party is in default, nor is any Subsidiary which is a party thereto in default,
in the observance or performance of any term or obligation to be performed by
it under any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, in any such case in
which a default or event would have a material adverse effect on the assets or
properties, business, results of operations, prospects or financial condition
of the Company.  No default exists, and no event has occurred which with notice
or lapse of time or both would constitute a default, in the due performance and
observance of any term, covenant or condition by the Company or any of the
Subsidiaries of any other agreement or instrument to which the Company or any
of the Subsidiaries is now a party or by which it or its properties or business
may be bound or affected which default or event would have a material adverse
effect on the assets or properties, business, results of operations, prospects
or financial condition of the Company.

       (f)    The Company has been duly organized and an active corporation in
good standing under the laws of the jurisdiction of its organization, with full
power and authority (corporate and other) to own or lease its properties and to
conduct its business as described in the Prospectus.  Each of the Subsidiaries
has been duly organized and is validly existing as a corporation under the laws
of the jurisdiction of its organization, with full power and authority
(corporate and other) to own or lease its properties and to conduct its
business as described in the Prospectus.  The Company and each Subsidiary are
duly qualified to transact





                                      3
<PAGE>   4
business as foreign corporations and are in good standing in all jurisdictions
in which the character of the business conducted by them or the properties
owned or leased by them requires such qualification, except where the failure
to so qualify would not have a material adverse effect on the business,
condition (financial or otherwise), results of operations, properties or
prospects of the Company and its Subsidiaries, taken as a whole. Complete and
correct copies of the certificate of incorporation and of the bylaws of the
Company and each of the Subsidiaries and all amendments thereto have been
delivered to the Underwriters and, with respect to the Company, filed with the
Commission as part of the Registration Statement and no changes therein will be
made subsequent to the date hereof and prior to each Closing Date.

       (g)    The capitalization of the Company as of June 30, 1996 is as set
forth under the caption "Capitalization" in the Prospectus, and the Common
Stock conforms to the description thereof contained under the caption
"Description of Capital Stock" in the Prospectus.  The outstanding shares of
Common Stock have been, and the Shares, upon issuance and delivery and payment
therefor in the manner herein described, will be, duly authorized, validly
issued, fully paid and are non-assessable.  There are no preemptive rights or
other rights to subscribe for or to purchase, or any restriction upon the
voting or transfer of, any shares of Common Stock pursuant to the Company's
certificate of incorporation, bylaws or other governing documents or any
agreement or other instrument to which the Company or any of its Subsidiaries
is a party or by which any of them may be bound.  Neither the filing of the
Registration Statement nor the offering or sale of the Shares as contemplated
by this Agreement give rise to any right, other than those which have been
waived or satisfied, for or relating to the registration of any shares of
Common Stock.  Except as disclosed in the Registration Statement and the
Prospectus, there is no outstanding option, warrant or other right calling for
the issuance of, and there is no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into, or exercisable
or exchangeable for, such stock.

       (h)    Coopers & Lybrand L.L.P., whose report appears in the Prospectus,
are independent certified public accountants as required by the Act and the
Rules and Regulations.  The consolidated financial statements and schedules of
the Company and the Subsidiaries, together with the related notes included in
the Registration Statement, any Preliminary Prospectus or the Prospectus,
comply in all material respects with the requirements of the Act and the Rules
and Regulations and present fairly the financial condition, results of
operations and cash flows of the entities purported to be shown thereby at the
dates and for the periods indicated.  All of such financial statements have
been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and all adjustments
necessary for a fair presentation of results for such periods have been made.
The information set forth in the Registration Statement under the captions
"Summary Financial Information," "Capitalization" and "Selected Financial Data"
present fairly in all material respects the information shown therein and have
been compiled on a basis consistent with the financial statements presented in
Statement.




                                      4
<PAGE>   5
The pro forma financial information set forth in the Registration Statement
reflects, subject to the limitations set forth in the Registration Statement as
to such pro forma financial statements, the results of operations of the
entities purported to be shown thereby for the periods indicated and conforms
to the requirements of Regulation S-X of the Rules and Regulations.

       (i)    Except as described in the Prospectus, there is no litigation or
governmental action or proceeding pending or threatened before any court or
governmental, administrative or regulatory agency, domestic or foreign or, to
the knowledge of the Company, contemplated, to which the Company or any of the
Subsidiaries or any officer thereof in their capacity as such is a party or of
which any of the Company's or any of its Subsidiary's property is the subject
and which, (i) if determined adversely to the Company or any of the
Subsidiaries, as applicable, would have a material adverse effect on the
business, condition (financial and otherwise), results of operations,
properties or prospects of the Company and the Subsidiaries, taken as a whole,
or (ii) is required to be disclosed in the Prospectus.

       (j)    The Company and its Subsidiaries have good and marketable title
in fee simple to all items of real property and good and marketable title to
all personal property owned by them, in each case clear of all liens,
encumbrances and defects except such as are disclosed in the Prospectus or such
as do not materially affect the value of such property and do not interfere
with the use made or proposed to be made of such property by the Company or
such Subsidiaries; and any real property and buildings held under lease by the
Company and its Subsidiaries are held by them under valid, existing and
enforceable leases with such exceptions as are not material and do not
interfere with the uses made or proposed to be made of such property and
buildings by the Company or such Subsidiaries.

       (k)    Neither the Company nor any of its Subsidiaries with the giving
of notice or lapse of time or both, would be, in violation of or in default
under, nor will the execution or delivery of this Agreement, the consummation
of the transactions contemplated herein or the fulfillment of the terms hereof
conflict with or result in a violation of or default under, (i) the certificate
of incorporation, bylaws or other governing documents of the Company or any of
its Subsidiaries, (ii) any foreign or domestic permit, judgment, decree, order,
statute, rule or regulation applicable to the Company or any of its
Subsidiaries, or (iii) any lease, license, contract, indenture, mortgage, deed
of trust, loan agreement or other agreement, instrument, obligation,
arrangement or understanding to which the Company or any of its Subsidiaries is
a party or by which it or any of its Subsidiaries or any of their respective
properties is bound, or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or assets of the Company or any
of its Subsidiaries, which violation or default would have a material adverse
effect on the business, condition (financial and otherwise), results of
operations, properties or prospects of the Company and the Subsidiaries, taken
as a whole.  Each approval, consent, order, authorization, designation,
declaration or filing by or with any regulatory, administrative or other
governmental body or court necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the





                                      5
<PAGE>   6
transactions contemplated herein (except such additional steps as may be
required by the Act, the Exchange Act, the National Association of Securities
Dealers, Inc. ("NASD") or which may be necessary to qualify the Shares for
public offering by the Underwriters under state securities or Blue Sky laws,
all of which have been or will be completed before the Closing Date) has been
obtained or made and is in full force and effect.

       (l)    The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.

       (m)    Since the respective dates as of which information is given in
the Registration Statement or, if later, the Prospectus, as each may be amended
or supplemented, there has not been any material adverse change in, or any
development which materially affects the business, condition (financial and
otherwise), results of operations, properties or prospects of the Company and
the Subsidiaries, taken as a whole, whether or not occurring in the ordinary
course of business.  Since the respective dates as of which information is
given in the Registration Statement or, if later, the Prospectus, as each may
be amended or supplemented, and except as set forth in the Prospectus, there
has not been any change in the capital stock of the Company or any Subsidiary,
or any transactions entered into by the Company or any Subsidiary (other than
those in the ordinary course of business consistent with past practices) that
are material with respect to the Company and the Subsidiaries, taken as a
whole, or any dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock or any issuance of warrants,
options, convertible securities or other rights to purchase or acquire capital
stock of the Company.

       (n)    The business and operations conducted by the Company and each of
its Subsidiaries are being conducted in accordance with all applicable laws,
rules, regulations and decrees of all public authorities, foreign or domestic,
having jurisdiction over the Company or any Subsidiary except for such failures
to comply which will not have a material adverse effect on the business,
financial position, stockholders' equity or results of operations, present or
prospective, of the Company.  The Company and each of its Subsidiaries has all
requisite corporate authority and owns or possesses all authorizations,
approvals, orders, licenses, registrations, other certificates and permits of
and from all governmental regulatory officials and bodies, necessary to conduct
the business of the Company and each of its Subsidiaries as presently described
in or contemplated in the Prospectus except where the failure to own or possess
all such authorizations, approvals, orders, licenses, registrations, other
certificates and permits would not have a material adverse effect on the
Company or its business, condition (financial or otherwise), results of
operations, properties or prospects; there is no proceeding pending or
threatened (or any basis therefor known to the Company) that may cause any such
authorization, approval, order, license, registration, certificate or permit to
be revoked, withdrawn, canceled, suspended or not renewed.






                                      6
<PAGE>   7
       (o)    The Company and each of its Subsidiaries owns, licenses or
possesses adequate rights to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, inventions, trade secrets and other
proprietary and similar rights necessary for the conduct of its business as
currently conducted.  Neither the Company nor any of its products has infringed
upon, or is presently infringing upon, any patents, patent rights, trademarks,
service marks, trade names, copyrights, licenses, inventions, trade secrets or
other proprietary rights of other persons.

       (p)    Any document hereafter filed by the Company pursuant to Section
12, 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), prior to the termination of the offering of the Shares, at the
time such documents were or are filed with the Commission, complied or will
comply in all material respects with the requirements of the Act and the Rules
and Regulations and the Exchange Act and the rules and regulations thereunder,
and did not at the time of filing, or will not when filed, include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading.

       (q)    The Company has the full power and authority (corporate and
other) to execute, deliver and perform this Agreement.  This Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as to rights to either
indemnity hereunder which may be limited by federal or state securities laws
and except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity.

       (r)    All transactions during the Company's current fiscal year and
last three (3) full fiscal years between the Company and any person who is or
was during such period an officer, director or 5% or greater stockholder of the
Company have been disclosed in the Prospectus to the extent required under the
Act or the Rules and Regulations.

       (s)    Other than the over-allotment option granted to the Underwriters,
the Company has not taken and will not take, directly or indirectly, any action
designed to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of shares of Common Stock to facilitate the sale or resale of the Shares.

       (t)    The Company has not distributed and will not distribute any
prospectus or other offering material in connection with the offering and sale
of the Shares other than any Preliminary Prospectus or the Prospectus or other
materials permitted by the Act and the Rules and Regulations to be distributed
by the Company.





                                      7
<PAGE>   8
       (u)    The Common Stock is listed on the Nasdaq National Market and the
Shares have been approved for quotation on the Nasdaq National Market, subject
only to official notification of issuance.

       (v)    The Company has not incurred any liability for any finder's or
broker's fee in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby.

       (w)    The Company is in compliance in all material respects with all
federal, state and local laws and regulations respecting the employment of its
employees and employment practices, terms and conditions of employment and
wages and hours relating thereto.  There are no pending investigations
involving the Company by the U.S. Department of Labor or any other governmental
agency responsible for the enforcement of such federal, state or local laws and
regulations.

       (x)    No statement, representation, warranty or covenant made by the
Company in this Agreement or made in any certificate or document delivered in
connection with this Agreement to be delivered to the Underwriters was or will
be, when made, materially inaccurate, untrue or incorrect.

       (y)    Except as disclosed in the Registration Statement, neither the
Company nor any of the Subsidiaries has at any time engaged in the handling,
manufacture, treatment, storage, use or generation of any Hazardous Materials
(as defined below) upon any real property owned or leased by it except in full
compliance with applicable law.  Except as disclosed in the Registration
Statement, neither the Company nor any of the Subsidiaries has been a party to
any litigation in which it is alleged, nor have any of them at any time
received written notice of any violation, other allegation, or investigation of
the possibility, that any of them or any of their assets is or was subject to
any liability, clean-up or other obligation arising out of or relating to any
discharge, or the storage, handling or disposal, of any Hazardous Material.
Except as disclosed in the Registration Statement, there has been no discharge
at any time by the Company or any of the Subsidiaries of any Hazardous Material
that the Company or any of the Subsidiaries has reported or is or was obligated
to report to any governmental agency the occurrence of which may have a
material adverse effect on the Company.  For the purposes of this Agreement,
"Hazardous Material" means any substance:  (i) the presence of which requires
investigation or remediation under any federal, state, provincial, or local
statute, regulation, ordinance, order, action, policy or common law; (ii) that
is or becomes defined as a "hazardous waste," "hazardous substance," pollutant
or contaminant under any federal, state or local statute, regulation, rule or
ordinance or amendments thereto including, without limitation the Comprehensive
Environmental Response Compensation and Liability Act (42 U.S.C. 9601 et seq.)
and/or the Resource Conservation and Recovery Act (42 U.S.C. section 6901 et
seq.); (iii) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes
regulated by any governmental authority, agency, department, commission, board,
agency or





                                      8
<PAGE>   9
instrumentality of the United States or of any state or any political
subdivision thereof or any similar Polish political entity; or (iv) which
contains polychlorinated biphenyls (PCBs), asbestos, urea formaldehyde foam
insulation or radon gas.

       (aa)   There is no labor strike, dispute or work stoppage or lockout
pending, or, to the knowledge of the Company, threatened, against or affecting
the Company or any of the Subsidiaries, and no such labor strike, dispute, work
stoppage or lockout has occurred with respect to any employees of the Company,
or any of the Subsidiaries during the two years prior to the date of this
Agreement.  Except (i) for the activities of the union at the Company's Denver
facility and (ii) as disclosed in the Registration Statement, no union
organization activity is in progress with respect to the employees of the
Company or the Subsidiaries, and no question concerning representation exists
with respect to such employees.  No unfair labor practice charge or complaint
against the Company or the Subsidiaries is pending or, to the knowledge of the
Company, threatened, before the National Labor Relations Board or similar
foreign authorities, and no such charge or complaint against the Company or any
of the Subsidiaries has been filed during the past two years.  There is no
pending, or, to the knowledge of the Company, threatened, grievance that, if
adversely decided, would have a material adverse effect on the business,
results of operations, prospects or financial condition of the Company.  No
charges with respect to or relating to the Company or the Subsidiaries are
pending before the Equal Employment Opportunity Commission or any similar
state, local or foreign agency responsible for the prevention of unlawful
employment practices, and no such charges have been filed with respect to the
Company or any of the Subsidiaries.

       (bb)   Each of the Company and the Subsidiaries has correctly and timely
filed all necessary federal, state, local and foreign income, property and
franchise tax returns and paid all taxes required to be shown as due thereon
and all assessments received by it to the extent that the same are material and
have become due.  Neither the Company nor any of its officers has any knowledge
of any tax deficiency of the Company or any of the Subsidiaries or any tax
proceeding or action pending or threatened against the Company or any of the
Subsidiaries that would materially adversely affect the business, financial
position, stockholders' equity or results of operations, present or
prospective, of the Company.  There are no liens for taxes on the assets of the
Company or the Subsidiaries, except for taxes not yet due.  There are no audits
pending of the Company's or any of the Subsidiaries' tax returns (federal,
state, local or foreign), and there are no claims which have been or, to the
best of the Company's knowledge, may be asserted relating to any such tax
returns which, if determined adversely, would result in the assertion by any
governmental agency of any deficiency material to the Company.  There have been
no waivers of any statute of limitations by the Company or any of the
Subsidiaries relating to tax returns (federal, state, local and foreign).  The
Internal Revenue Service has not asserted or threatened to assert any
assessment, claim or liability for taxes due or to become due in connection
with any review or examination of the tax returns of the Company or any of the
Subsidiaries for any year.





                                      9
<PAGE>   10
       (cc)   None of the Company, any Subsidiary or any officer or director
purporting to act on behalf of the Company or any Subsidiary has during the
past five years (i) made any contributions to any candidate for political
office, or failed to disclose fully any such contributions, in violation of
law; (ii) made any payment to any Federal, state, local or foreign governmental
officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law;
(iii) made any payment outside the ordinary course of business to any
purchasing or selling agent or person charged with similar duties of any entity
to which the Company or such Subsidiary as applicable, sells (or has in the
past sold) or from which the Company or such Subsidiary, as applicable, buys
(or has in the past bought) products for the purpose of influencing such agent
or person to buy products from or sell products to the Company or such
Subsidiary, as applicable; or (iv) engaged in any transaction, maintained any
bank account or used any corporate funds except for transactions, bank accounts
and funds which have been and are reflected in the normally maintained books
and records of the Company or such Subsidiary, as applicable.

       (dd)   Each of the Company and the Subsidiaries has customary, and in
the reasonable judgment of the Company, adequate liability and other insurance
policies insuring it against the risks of loss arising out of or related to its
businesses, as described in the Registration Statement and Prospectus, issued
by insurers of recognized financial responsibility.

       (ee)   The Company and each of the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is (or was)
taken with respect to any differences.

       (ff)   No authorization, approval, consent, order, license, certificate
or permit is required of or from any governmental or regulatory body under any
federal, foreign, provincial, state or local law for the execution, delivery
and performance of this Agreement or for the consummation of the transactions
contemplated hereby, except such as have been obtained.  This Agreement has
been presented to any and all governmental agencies or authorities to the
extent required and this Agreement and the transactions contemplated hereby
were approved by or on behalf of such governmental agencies or authorities to
the extent required, and such approvals have not been revoked, modified or
rescinded.

       (gg)   The Company is not required to register as a "broker" or "dealer"
in accordance with the provisions of the Exchange Act or the rules and
regulations promulgated thereunder.





                                     10
<PAGE>   11
       (hh)   The Company has complied with all of the requirements and filed
the required forms, if any, as specified in Florida Statutes Section 517.075.

       (ii)   The Company is in compliance with the Foreign Corrupt Trade
Practices Act.

       2.     REPRESENTATIONS AND WARRANTIES OF SELLING STOCKHOLDERS.

       Each Selling Stockholder, severally and not jointly, represents and
warrants to each Underwriter (a) that such Selling Stockholder now has valid
marketable title to such number of shares of the Common Stock as are to be sold
by such Selling Stockholder pursuant to this Agreement (the "Stockholder
Shares"), and will have valid and marketable title to such Stockholder Shares
free and clear of any security interests, claims, liens, equities and other
encumbrances, (b) that such Stockholder Shares, when delivered, will have been
duly authorized and will be validly issued, fully paid and nonassessable, (c)
that such Selling Stockholder now has, and on each Closing Date on which such
Selling Stockholder will sell Common Stock, will have, the legal right and
power, and all consents, approvals and authorizations required by law (except
as may be required under state securities laws), to enter into this Agreement
and to sell, transfer and deliver such Stockholder Shares in the manner
provided in this Agreement and that no such action will contravene any
provision of applicable law or, if such Selling Stockholder is a corporation,
the certificate of incorporation or bylaws of each Selling Stockholder or any
agreement or other instrument binding upon such Selling Stockholder and (d)
that all information furnished in writing by or on behalf of such Selling
Stockholder expressly for use in the Registration Statement and Prospectus is,
and on each Closing Date will be, true, correct and complete, and does not, and
on each Closing Date will not, contain any untrue statement of a material fact
or omit to state any material fact necessary to make such information not
misleading.

       3.     PURCHASE OF THE SHARES BY THE UNDERWRITERS.

       (a)    Subject to the terms and conditions and upon the basis of the
representations, warranties and covenants herein set forth, the Company agrees
to issue and sell to the Underwriters, and each Underwriter agrees, severally
and not jointly, to purchase at a price of $[______] per Share, the number of
Firm Shares set forth opposite such Underwriter's name in Schedule A hereto,
and each Selling Stockholder, severally and not jointly, hereby agrees to sell
to the Underwriters and each Underwriter agrees, severally and not jointly, to
purchase at a price of $[______] per Share, the number of Firm Shares set forth
opposite such Selling Stockholder's name in Schedule B hereto (in proportion to
the number of Firm Shares set forth opposite such Underwriter's name in
Schedule A hereto), subject to adjustment in accordance with the terms hereof,
except that the respective purchase obligations of each Underwriter shall be
adjusted so that no Underwriter shall be obligated to purchase fractional
shares.  If not all of the Option Shares are purchased, the Option Shares
offered by the Selling Stockholder shall be purchased in their entirety prior
to the purchase of any of the Option





                                     11
<PAGE>   12
Shares offered by the Company.  The Underwriters agree to offer the Firm Shares
to the public as set forth in the Prospectus.

       (b)    The Company and one of the Selling Stockholders hereby grants to
the Underwriters an option to purchase from the Company and such Selling
Stockholder, solely for the purpose of covering over-allotments in the sale of
Firm Shares, all or any portion of the Option Shares for a period of thirty
(30) days from the date hereof at the purchase price per Share set forth above
in Section 3(a).  Option Shares shall be purchased from the Company and such
Selling Stockholder, severally and not jointly, for the account of each
Underwriter as nearly as practicable in proportion to the number of Firm Shares
set forth opposite such Underwriter's name in Schedule A hereto, except that
the respective purchase obligations of each Underwriter shall be adjusted by
the Underwriters so that no Underwriter shall be obligated to purchase
fractional Option Shares.  If not all of the Option Shares are purchased, the
Option Shares offered by the Selling Stockholder shall be purchased in their
entirety prior to the purchase of any of the Option Shares offered by the
Company.

       4.     DELIVERY OF AND PAYMENT FOR SHARES.

       (a)    Delivery of certificates for the Firm Shares and certificates for
the Option Shares, if the option to purchase the same is exercised on or before
the third Business Day (as defined below) prior to the Closing Date to be
purchased by the Underwriters from the Company and the Selling Stockholders and
payments therefor shall be made at the offices of Ater Wynne Hewitt Dodson &
Skerritt, LLP, 222 S.W. Columbia, Suite 1800, Portland, Oregon 97201 (or such
other place as mutually may be agreed upon), at 10:00 a.m. Pacific Time on the
third business day following the date of this Agreement (or the fourth business
day if permitted by Rule 15c6-1(c) promulgated under the Exchange Act), or at
such time on such other date, not later than 10 business days after the date of
this Agreement, as shall be agreed upon by the Company and the Underwriters
(the "Closing Date").

       (b)    The option to purchase Option Shares granted in Section 3 hereof,
may be exercised during the term thereof by written notice to the Company and
the applicable Selling Stockholder from the Underwriters.  Such notice shall
set forth the aggregate number of Option Shares as to which the option is being
exercised and the time and date, not earlier than either the Closing Date or
the second Business Day after the date on which the option shall have been
exercised or later than the third Business Day after the date of such exercise,
as determined by the Underwriters, when the Option Shares are to be delivered
(the "Option Closing Date").

       (c)    Delivery and payment for such Option Shares is to be at the
offices set forth above for delivery and payment of the Firm Shares.  (The
Closing Date and the Option Closing Date are herein individually referred to as
a "Closing Date" and collectively referred to as the "Closing".)





                                     12
<PAGE>   13
       (d)    Delivery of certificates for the Shares shall be made by or on
behalf of the Company and the Selling Stockholders to the Underwriters, for the
respective accounts of the Underwriters, with any transfer taxes payable in
connection with the transfer of the Shares to the Underwriters duly paid,
against payment by the Underwriters, for the several accounts of the
Underwriters, of the purchase price therefor by certified or bank cashier's
check payable to the order of the Company and each Selling Stockholder, as
applicable in next day funds.  The certificates for the Shares shall be
registered in such names and denominations as the Underwriters shall have
requested at least two (2) full Business Days prior to the applicable Closing
Date, and shall be made available for checking and packaging at the offices of
or other location designated by the Underwriters at least one (1) full Business
Day prior to such Closing Date.  Time shall be of the essence and delivery at
the time and place specified in this Agreement is a further condition to the
obligations of each Underwriter.

       (e)    The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Shares by the Company to the respective
Underwriters shall be borne by the Company.  The Company will pay and save each
Underwriter and any subsequent holder of the Shares harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
federal and state stamp and other transfer taxes, if any, which may be payable
or determined to be payable in connection with the original issuance or sale to
such Underwriter of the Shares.

       5.     OFFERING BY UNDERWRITERS.

       It is understood that the several Underwriters intend to make a public
offering of the Firm Shares as soon as you deem it advisable to do so.  The
Firm Shares are to be initially offered to the public at the initial public
offering price set forth in the Prospectus; provided, however, that you may
from time to time increase or decrease the public offering price prior to the
Closing Date.  To the extent, if at all, that any Option Shares are purchased
pursuant to Section 3 hereof, the Underwriters will offer them to the public on
the foregoing terms.

       6.     COVENANTS OF THE COMPANY.

       The Company covenants and agrees with each Underwriter that:

       (a)    The Company shall use its best efforts to cause the Registration
Statement and any post-effective amendment subsequently filed to become
effective promptly or, if the procedure in Rule 430A under the Rules and
Regulations is followed, comply with the provisions of and make all requisite
filings with the Commission pursuant to such Rule and to notify you promptly
(in writing, if requested) of all such filings.  The Company shall prepare and
file with the Commission, promptly upon your request, any amendments of or
supplements to the Registration Statement or Prospectus which, in your opinion,
may be necessary or advisable in connection with the distribution of the
Shares; and the Company





                                     13
<PAGE>   14
may not file any amendment of or supplement to the Registration Statement or
the Prospectus, that is not approved by you after reasonable notice thereof.

       (b)    The Company will advise you promptly, and, if requested by you,
will confirm such advice in writing, (i) when the Registration Statement shall
have become effective and when any amendment thereto shall have become
effective and when any amendment of or any supplement to the Prospectus shall
be filed with the Commission; (ii) of any request of the Commission for
additional information or for any amendment of or supplement to the
Registration Statement or the Prospectus; (iii) of the issuance by the
Commission or any other governmental body of any order suspending the
effectiveness of the Registration Statement or the use of the Prospectus or of
the institution of any proceedings for such purpose; (iv) of the suspension of
the qualification of the Shares for offering or sale in any jurisdiction or of
the institution of any proceedings for such purpose; (v) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus or the Prospectus; or (vi) of the
happening of any event which in the judgment of the Company makes any material
statement in the Registration Statement or Prospectus untrue or which requires
the making of any changes on the Registration Statement or Prospectus in order
to make the statements therein not misleading.  The Company will use its best
efforts to prevent the issuance of any such order preventing or suspending the
use of the Prospectus; and to obtain as soon as possible the lifting thereof,
if issued.

       (c)    The Company will cooperate with the Underwriters in endeavoring
to qualify the Shares for sale under the securities laws of such jurisdictions
as the Underwriters may reasonably have designated in writing and will make
such applications, file such documents, and furnish such information as may be
reasonably required for that purpose.  The Company will, from time to time,
prepare and file such statements, reports and other documents as are or may be
required to continue such qualifications in effect for so long as is required
under the laws of such jurisdictions for such offering and sale.

       (d)    The Company will furnish the Underwriters with as many copies of
any Preliminary Prospectus as the Underwriters may reasonably request and,
during the period when delivery of a prospectus is required under the Act, the
Company will furnish the Underwriters with as many copies of the Prospectus in
final form, or as thereafter amended or supplemented, as the Underwriters may,
from time to time, request.  In addition, the Company will deliver to each of
the Underwriters, at or before the Closing Date and without charge, a signed
copy of the Registration Statement (including the exhibits thereto) and all
amendments and supplements thereto.

       (e)    Within the time during which a prospectus relating to the Shares
is required to be delivered under the Act, the Company shall comply with all
requirements imposed upon it by the Act and the Rules and Regulations, as from
time to time in force, so far as is necessary to permit the continuance of
sales of or dealings in the Shares as contemplated by the





                                     14
<PAGE>   15
provisions hereof and the Prospectus.  If during such period any event occurs
as a result of which the Prospectus as then amended or supplemented would
include any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein not misleading, or if during such
period it is necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act and the Rules and Regulations, the Company
shall promptly notify you and shall amend the Registration Statement or
supplement the Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.

       (f)    The Company will make generally available to its security
holders, in the manner contemplated by Rule 158(b) under the Act, and will
deliver to the Underwriters, as soon as it is practicable to do so, but in any
event not later than 45 days after the end of its fiscal quarter in which the
first anniversary date of the effective date of the Registration Statement
occurs (or not later than 90 days after the end of such fiscal quarter if such
fiscal quarter is the last fiscal quarter of the fiscal year), an earnings
statement satisfying the requirements of Section 11(a) of the Act and covering
a period of at least twelve (12) consecutive months beginning after the
effective date of the Registration Statement, and will advise you in writing
when such statement has been so made available.

       (g)    The Company will apply the net proceeds from the sale of the
Shares as set forth under the caption "Use of Proceeds" in the Prospectus.

       (h)    During a period of five (5) years from the date hereof, the
Company shall furnish to each Underwriter who may so request copies of all
reports or other communications furnished to stockholders and copies of any
reports or financial statements furnished to or filed with the Commission or
any national securities exchange or quotation system on which any class of
securities of the Company is listed.

       (i)    The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.

       (j)    The Company will not at any time, directly or indirectly, take
any action designed, or which might reasonably be expected, to cause or result
in, or which will constitute stabilization of the price of the shares of Common
Stock to facilitate the sale or resale of any of the Shares.

       (k)    The Company authorizes the Underwriters to use the Prospectus as
from time to time amended or supplemented in connection with the offering and
sale of the Shares.

       (l)    The Company shall cause the Shares to be listed on the Nasdaq
National Market and shall use its best efforts to maintain the Common Stock on
the Nasdaq National Market (or on a national securities exchange) for a period
of five years after the effective date of the Registration Statement.



                                     15
<PAGE>   16
       7.     COSTS AND EXPENSES.

       Each Selling Stockholder, severally and not jointly, agrees to pay or
cause to be paid all taxes, if any, on the transfer and sale of the Stockholder
Shares being sold by such Selling Stockholder and the fees and expenses of
counsel and accountants retained by such Selling Stockholder, all to the extent
the Company has not agreed by separate instrument with such Selling Stockholder
to pay such fees and expenses of such Selling Stockholder.  Whether or not the
transactions contemplated hereunder are consummated or this Agreement becomes
effective or is terminated, the Company agrees to pay or reimburse if paid by
the Underwriters, all costs, expenses and fees incident to the performance of
the obligations of the Company and the Selling Stockholders under this
Agreement, including, without limiting the generality of the foregoing, the
following: accounting fees of the Company and the Selling Stockholders; the
fees and disbursements of counsel for the Company and the Selling Stockholders;
all expenses incident to the issuance and delivery of the Shares (including all
printing and engraving costs); all fees and expenses of the registrar and
transfer agent of the Common Stock; the cost of preparation, printing and
filing of the Registration Statement, Preliminary Prospectus and the Prospectus
(including the financial statements therein and all exhibits thereto) and any
amendments and supplements thereto and the printing, mailing and delivery to
the Underwriters and dealers of copies thereof and of this Agreement, the
Agreement Among Underwriters, any Selected Dealers Agreement, any other
underwriting document, the Blue Sky memorandum and any supplements or
amendments thereto; the filing fees of the Commission; the filing fees incident
to securing any required review by the NASD of the terms of the sale of the
Shares; filing fees and listing fees, if any, transfer taxes and the expenses
(including the fees and disbursements of counsel for the Underwriters) incurred
in connection with the qualification of the Shares under state securities or
Blue Sky laws which amount shall not exceed $10,000 without the Company's prior
written consent; the Company's slide presentation and travel in connection with
informational meetings for the brokerage community and institutional and retail
investors; and all other costs and expenses incident to the performance of the
obligations of the Company and the Selling Stockholders hereunder which are not
otherwise specifically provided for in this Section 7.  If the sale of the
Shares provided for herein is not consummated by reason of any failure, refusal
or inability on the part of the Company or the Selling Stockholders to perform
any agreement on its part to be performed or because any other condition of the
Underwriters' obligations hereunder within the control of the Company is not
fulfilled, the Company shall reimburse the several Underwriters for all
reasonable out-of-pocket expenses and disbursements (including fees and
disbursements of counsel) incurred by the Underwriters in connection with their
investigation, preparing to market and marketing the Shares or otherwise in
contemplation of performing their obligations hereunder.

       8.     CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.

       The obligations of the several Underwriters hereunder are subject to the
accuracy as of the date hereof and each Closing Date (as if made at such
Closing Date) of the representations





                                     16
<PAGE>   17
and warranties of the Company and the Selling Stockholders contained herein,
and to the performance and fulfillment by the Company and the Selling
Stockholders of their covenants, obligations and conditions hereunder, and to
the following additional conditions:

       (a)    The Registration Statement and all post-effective amendments
thereto shall have become effective and any and all filings required by Rule
424 and Rule 430A of the Rules and Regulations shall have been made within the
time required by the Act and the Rules and Regulations;  no order suspending
the effectiveness of the Registration Statement or any amendment or supplement
thereto or the qualification or registration of the Shares under the securities
or Blue Sky laws of any jurisdiction, shall have been issued and no proceedings
for such purposes shall have been initiated or threatened, or, to the knowledge
of the Company, shall be contemplated and all requests for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been disclosed to the Underwriters and complied with to
its satisfaction and the satisfaction of the Commission; and neither the
Registration Statement or Prospectus nor any amendment or supplement thereto
shall have been filed to which counsel to the Underwriters shall have
reasonably objected or have not given their consent.

       (b)    No Underwriter shall have advised the Company that the
Registration Statement or Prospectus, or any amendment or supplement thereto,
contains an untrue statement of fact which, in the opinion of counsel to the
Underwriter, is material, or required to be stated therein or is necessary to
make the statements therein not misleading.

       (c)    Subsequent to the respective dates as of which information is
given in the Registration Statement and Prospectus, there shall not have been
any change in, or any development which affects the capital stock of the
Company or the business condition (financial or otherwise), results of
operations, properties or prospects of the Company and its Subsidiaries, taken
as a whole that, in your judgment, makes it impractical or inadvisable to
market the Shares on the terms and in the manner contemplated in the
Prospectus.

       (d)    You shall have received on each Closing Date the opinion of Ater
Wynne Hewitt Dodson & Skerritt, LLP, counsel for the Company, dated as of such
Closing Date addressed to the Underwriters, in form and substance satisfactory
to you and counsel for the Underwriters to the effect that:

              (i)    Each of the Company and its Subsidiaries has been duly
       organized and is an active corporation in good standing under the laws
       of the jurisdiction of its organization, with full corporate power and
       authority to own or lease its properties and conduct its business as
       described in the Prospectus, and is duly qualified to do business and is
       in good standing as a foreign corporation in each jurisdiction in which
       the character of the business conducted by it or the location of the
       properties owned or leased by it makes such qualification necessary,
       except to the extent that the failure to




               
                                     17
<PAGE>   18
       be so qualified or be in good standing would not have a material adverse
       effect on the Company and its Subsidiaries, taken as a whole;

              (ii)   The Company and each of the Subsidiaries has all requisite
       corporate power and authority and all necessary authorizations,
       approvals, consents, orders, licenses, certificates and permits required
       to own, lease and license its assets and properties and to conduct its
       business as now being conducted and as described in the Registration
       Statement and the Prospectus.  The Company has all requisite corporate
       power and authority and all necessary authorizations, approvals,
       consents, orders, licenses, certificates and permits to enter into,
       deliver and perform this Agreement, and, to issue and sell the Shares,
       other than those authorizations, approvals, consents, orders licenses,
       certificates and permits required under state and foreign securities
       laws.  To such counsel's knowledge, the Company does not control,
       directly or indirectly, any corporation, partnership, joint venture,
       association or other business organization other than the Subsidiaries.

              (iii)  The Company has authorized, issued  and outstanding
       capital stock as of June 30, 1996 as described under the caption
       "Capitalization" in the Prospectus and the Common Stock conforms to the
       description thereof contained under the caption "Description of Capital
       Stock" in the Prospectus.  The outstanding shares of the Company's
       capital stock have been, and the Shares upon issuance, delivery and
       payment therefor in the manner herein described, will be, duly
       authorized, validly issued, fully paid and are non-assessable.  The
       certificates for the Shares, are in due and proper form under the
       corporations law of the State of the Company's organization.  There are
       no preemptive or other rights to subscribe for or to purchase, or any
       restriction upon the voting or transfer of, any shares of the Company's
       capital stock pursuant to the Company's certificate of incorporation,
       bylaws, other governing documents or any agreements or other instruments
       known to such counsel to which the Company or any of its Subsidiaries is
       a party or by which any of them is bound; and to such counsel's
       knowledge, neither the filing of the Registration Statement nor the
       offering or sale of the Shares as contemplated by this Agreement gives
       rise to any rights, which have not been waived or satisfied, for or
       relating to the registration of any shares of the Company's capital
       stock.  Based solely on such counsel's review of the stock records of
       each Subsidiary and the certificates representing such stock all of the
       outstanding shares of capital stock of each Subsidiary of the Company
       are owned, directly or indirectly, beneficially and of record by the
       Company, free and clear of any claim, lien, charge or encumbrance of any
       kind whatsoever.  All corporate action required to be taken on the part
       of the Company for the authorization, issuance and sale of the Shares by
       the Company has been duly and validly taken;

              (iv)   The Registration Statement and all post-effective
       amendments thereto have become effective under the Act and, to such
       counsel's knowledge, such counsel has reasonable grounds to believe and
       does believe that no stop order proceedings with





                                     18
<PAGE>   19
       respect thereto have been instituted or are pending before or threatened
       by the Commission and any and all filings required by Rule 424 and Rule
       430A of the Rules and Regulations have been made;

              (v)    The Registration Statement and the Prospectus and any
       amendment or supplement thereto, as of their respective effective dates
       comply as to form in all material respects with the requirements of the
       Act and the Rules and Regulations (except that counsel need express no
       opinion on the financial statements or other financial data);

              (vi)   Neither the Company nor any of its Subsidiaries is, or
       with the giving of notice or lapse of time or both would be, in
       violation of or in default under, nor will the execution or delivery
       hereof or consummation of the transactions contemplated hereby result in
       a violation of, or constitute a default under, the certificate of
       incorporation, bylaws or other governing documents of the Company or any
       of its Subsidiaries, or, to the knowledge of such counsel, any
       agreement, indenture or other instrument to which the Company or any of
       its Subsidiaries is a party or by which any of them are bound, or to
       which any of their properties are subject, nor will the performance by
       the Company of its obligations hereunder violate any law, rule or
       regulation of any governmental agency or body having jurisdiction over
       the Company, its Subsidiaries or their properties, or result in the
       creation or imposition of any lien, charge, claim or encumbrance upon
       any property or assets of the Company or any of its Subsidiaries.
       Except for permits and similar authorizations required under the Act,
       the NASD, and the securities or Blue Sky laws of certain jurisdictions
       and for such permits and authorizations which have been obtained, no
       consent, approval, authorization or order of any court, governmental
       agency or body or financial institution is required in connection with
       execution and delivery of this Agreement or the consummation of the
       transactions contemplated by this Agreement;

              (vii)  All descriptions in the Prospectus of statutes,
       regulations, legal or governmental proceedings, contracts and other
       documents, insofar as such statements constitute a summary of the legal
       matters, documents or proceedings referred to therein, are accurate and
       fairly present the information required to be shown; and such counsel,
       after conducting a reasonable investigation, do not know of or believe
       that any contracts or documents of a character required to be summarized
       or described therein or to be filed as exhibits thereto which are not so
       summarized, described or filed, nor after conducting a reasonable
       investigation do such counsel know of or believe that there is any
       pending or threatened litigation or any governmental proceeding, statute
       or regulation required to be described in the Prospectus which is not so
       described;

              (viii) To such counsel's knowledge, there is no litigation or
       governmental or other proceeding or investigation before any court or
       before or by any public body or




                                     19
<PAGE>   20
       board pending or threatened against the Company or any of the
       Subsidiaries which is required to be disclosed in the Prospectus and
       which is not so disclosed;

              (ix)   This Agreement has been duly authorized, executed and
       delivered by the Company and constitutes the valid and binding agreement
       of the Company and is enforceable against the Company in accordance with
       its terms, except as the right to indemnity under this Agreement may be
       limited by Federal or state securities laws and except as (i) may be
       limited by bankruptcy, insolvency, reorganization or other similar laws
       affecting creditors' rights generally and (ii) is subject to general
       principles of equity (regardless of whether such enforceability is
       considered in a proceeding in equity or at law);

              (x)    The Company is not an "investment company" or an entity
       "controlled" by an "investment company," as such terms are defined in
       the Investment Company Act of 1940, as amended;

              (xi)   To such counsel's knowledge, there are no persons with
       registration or other similar rights to have any securities registered
       pursuant to the Registration Statement or otherwise registered by the
       Company under the Securities Act, except as disclosed in the
       Registration Statement and the Prospectus; and

              (xiii) To such counsel's knowledge, the Company is in compliance
       with the Foreign Corrupt Trade Practices Act.

              To the extent deemed advisable by such counsel, they may rely as
       to matters of fact on certificates of officers of the Company and public
       officials and on the opinions of other counsel satisfactory to the
       Underwriters as to matters which are governed by laws other than the
       Federal laws of the United States; provided that such counsel shall
       state that in their opinion that they believe the Underwriters and they
       are justified in relying on such other opinions.  Copies of such
       certificates and other opinions shall be furnished upon request to the
       Underwriters and counsel for the Underwriters.

              In addition, such opinion shall include a statement to the effect
       that, although such counsel has not independently verified the accuracy,
       completeness or fairness of the statements contained in the Registration
       Statement and the Prospectus (except as specified in the foregoing
       opinion), based on such counsel's representation of the Company,
       including but not limited to, such counsel's participation in the
       preparation of the Registration Statement and the Prospectus, such
       counsel's participation in conferences with representatives of the
       Underwriters or officers of the Company, such counsel's examination of
       the documents referred to in the Registration Statement or the
       Prospectus, and such other procedures as such counsel has deemed
       appropriate, no facts have come to the attention of such counsel which
       lead such counsel to believe that, under the Securities Act and the
       Rules, the Registration Statement at the time it





                                     20
<PAGE>   21
       became effective contained any untrue statement of a material fact or
       omitted to state a material fact required to be stated therein or
       necessary to make the statements therein, in light of the circumstances
       under which they were made, not misleading, or that, as of the date of
       the Prospectus, as amended or supplemented, the Prospectus as so amended
       or supplemented contained any untrue statement of a material fact or
       omitted to state a material fact necessary in order to make the
       statements therein, in the light of the circumstances under which they
       were made, not misleading (in each case except with respect to the
       financial statements and notes and schedules thereto and other financial
       and statistical data, as to which such counsel need make no statement).

              (e)    You shall have received on the Closing Date an opinion of
Stoel Rives LLP, counsel for the Selling Stockholders, dated the Closing Date, 
to the effect that:

              (i)    This Agreement has been duly authorized, executed and
       delivered by or on behalf of each Selling Stockholder;

              (ii)   The execution, delivery and performance of this Agreement
       by each Selling Stockholder will not contravene (i) to such counsel's
       knowledge, any provision of applicable law, (ii) the certificates of
       incorporation, bylaws or other governing documents of any Selling
       Stockholder that is a corporation, or the articles of partnership of any
       Selling Stockholder that is a limited partnership, or the trust
       agreement of any Selling Stockholder that is a trust or any agreement or
       other instrument to be binding upon any Selling Stockholder, and (iii)
       to such counsel's knowledge, no consent, approval or authorization of
       any governmental body is required for the performance of this Agreement
       by any Selling Stockholder, except such as are specified and have been
       obtained and except such as may be required by federal securities laws
       and state securities or Blue Sky laws in connection with the purchase
       and distribution of the Shares by the Underwriters;

              (iii)  Each Selling Stockholder has valid marketable title to the
       Shares to be sold by such Selling Stockholder and has the legal right
       and power, and all authorization and approval required by law, to enter
       into this Agreement and to sell, transfer and deliver the Shares to be
       sold by such Selling Stockholder, except such as may be required by
       federal securities laws and state securities or Blue Sky laws in
       connection with the purchase and distribution of the Shares by the
       Underwriters;

              (iv)   The Custody Agreement signed by each Selling Stockholder
       and the Custodian relating to the deposit of the Shares to be sold by
       such Selling Stockholder, and the Power-of-Attorney appointing certain
       individuals as such Selling Stockholder's attorneys-in-fact to the
       extent set forth therein, relating to the transactions contemplated
       hereby and by the Registration Statement, have been duly authorized,
       executed and delivered by each Selling Stockholder and are valid and
       binding agreements of each Selling Stockholder, except as to those
       provisions relating to





                                     21
<PAGE>   22
       indemnity or contribution for liabilities arising under the Act, as to
       which such counsel need express no opinion; and

              (v)    Delivery of the certificates for the Shares to be sold by
       each Selling Stockholder pursuant to this Agreement to each of the
       several Underwriters who have purchased the Shares in good faith and
       without notice of any adverse claim will pass to each such Underwriter
       marketable title to such Shares free and clear of any security
       interests, claims, liens, equities and other encumbrances.

       With respect to all of paragraph (e) above, counsel may rely, to the
extent such counsel deems appropriate, as to matters of fact upon the
representations of each Selling Stockholder contained herein and in the
aforementioned Custody Agreements and Powers of Attorney and in other documents
and instruments and opinions of local counsel; provided however, that copies of
such Custody Agreements and Powers of Attorney and of such other documents and
instruments shall be delivered to the Underwriters and shall be reasonably
satisfactory to your counsel and, in the case of local counsel, such local
counsel shall be reasonably satisfactory to your counsel, (a) a copy of each
opinion from local counsel so relied upon shall be delivered to you and shall
be reasonably satisfactory to your counsel and (b) counsel for each Selling
Stockholder shall state that they have no reason to believe that they are not
justified in relying thereon.  With respect to all of paragraph (e) above,
counsel may assume the legal capacity and the absence of any legal disability
to contract as to each Selling Stockholder that is a natural person.  The
opinions as to all of paragraph (e) above shall state that such opinions may be
relied upon by the Custodian and the attorneys-in-fact appointed under the
Powers of Attorney executed by the Selling Stockholders.

       (f)    The Underwriters shall have received on the date of this
Agreement and also on each Closing Date, a signed letter from Coopers & Lybrand
L.L.P., in form and substance satisfactory to the Underwriters and the
Underwriters' counsel regarding the financial information contained in the
Prospectus, the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or any Blue Sky Application
(as defined below).

       (g)    The Underwriters shall have received on the date hereof and on
each Closing Date, a certificate or certificates signed on behalf of the
Company by the Chairman of the Board or Chief Executive Officer and the Chief
Financial Officer of the Company, in form and substance satisfactory to the
Underwriters, to the effect that:

              (i)    The Registration Statement has become effective under the
       Act, no order suspending the effectiveness of the Registration Statement
       has been issued, and no proceedings for that purpose have been initiated
       or threatened or are, to their knowledge, contemplated by the
       Commission;





                                     22
<PAGE>   23
              (ii)   The representations and warranties of the Company in this
       Agreement are true and correct, as if made at and as of such Closing
       Date, and the Company has complied with all the covenants and agreements
       and satisfied all the conditions on its part to be performed or
       satisfied at or prior to such Closing Date;

              (iii)  Any and all filings required by Rule 424 and Rule 430A of
       the Rules and Regulations have been made;

              (iv)   The signers of said certificate have carefully examined
       the Registration Statement and the Prospectus, and any amendments or
       supplements thereto, and such documents contain all statements and
       information required to be included therein, and do not include any
       untrue statement of a material fact or omit to state any material fact
       required to be stated therein or necessary to make the statements
       therein not misleading;

              (v)    Since the effective date of the Registration Statement,
       there has occurred no event required to be set forth in an amendment or
       supplement to the Registration Statement or the Prospectus which has not
       been so set forth; and

              (vi)   There has not occurred any material adverse change, or any
       development involving a prospective material adverse change, in the
       condition (financial or otherwise), results of operations, properties or
       prospects of the Company and its Subsidiaries, taken as a whole, from
       that set forth in the Registration Statement.

       (h)    Since the effective date of the Registration Statement, neither
the Company nor any of its Subsidiaries shall have sustained any loss by fire,
flood, accident or other calamity, or shall have become a party to or the
subject of any litigation, which is material to the Company or its
Subsidiaries, nor shall there have been a material adverse change in the
general affairs, key personnel, or net worth of the Company and its
Subsidiaries, taken as a whole, whether or not arising in the ordinary course
of business, which loss, litigation or change, in your judgment, shall make it
impractical or inadvisable to proceed with the marketing of the Shares.

       (i)    The Shares shall be qualified for sale in such jurisdictions as
the Underwriters may request and each such qualification shall be in effect and
not subject to any stop order or other proceeding on each Closing Date.

       (j)    Prior to the Closing Date the Shares shall have been duly
authorized for listing on the Nasdaq National Market, subject only to official
notice of issuance.

       (k)    The Company shall have furnished to the Underwriters such
certificates, in addition to those specifically mentioned herein, as the
Underwriters may have reasonably requested as to the accuracy and completeness
at each Closing Date of any statement in the Registration Statement, the
Prospectus as to the accuracy at each Closing Date of the



                                        
                                     23
<PAGE>   24
representations and warranties of the Company herein, as to the performance by
the Company of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.

       (l)    No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceedings for such purpose shall be pending before or threatened by
the Commission, and any requests for additional information on the part of the
Commission (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Underwriters.

       (m)    The Company will have obtained from each of its officers,
directors and one percent or greater shareholders their written agreement that,
for a period of 90 days from the date of the Prospectus, that they will not,
without the prior written consent of the Underwriters, sell, contract to sell,
grant any option for the sale of or otherwise dispose of, directly or
indirectly, any shares of Common Stock of the Company owned by them (or any
securities convertible into or exercisable for such shares of Common Stock) or
file a registration statement contemplating such sale or disposition.

       The several obligations of the Underwriters to purchase Option Shares
hereunder are subject to the delivery to you on the Option Closing Date of such
documents comparable to the foregoing as you may reasonably request.

       9.     INDEMNIFICATION.

       (a)    The Company will indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning set forth
in the Act (i) against any losses, claims, damages or liabilities to which such
Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) arise out of or are based upon (A) any
untrue statement or alleged untrue statement made by the Company in Section 1
hereof, or (B) any untrue statement or alleged untrue statement of any material
fact contained (x) in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, (y) in any Blue Sky
application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Shares under
the securities or Blue Sky laws thereof (any such application, document or
information being hereinafter called a "Blue Sky Application"), or arise out of
or are based upon the omission or alleged omission to state in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto or in any Blue Sky Application, a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) against any and all loss, liability, claim, damage and expense whatsoever,
as incurred, to the extent of the aggregate amount paid in settlement of any




                                        
                                     24
<PAGE>   25
litigation, or any investigation or proceeding by any, governmental agency or
body, commenced or threatened, or of any claim, in each case arising out of or
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the written consent
of the Company; and (iii) against any and all expense whatsoever, as incurred
(including, subject to Section 9(d) hereof, the fees and disbursements of
counsel chosen by the Underwriters), reasonably incurred in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim, in each case arising out of or based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above, and will reimburse
promptly each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue statement
or alleged untrue statement, or omission or alleged omission, made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company through you by or on behalf of any Underwriter specifically for use in
the preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or in any Blue Sky
Application; provided further, however, that the indemnity agreement provided
in this Section with respect to any Prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
charges, liabilities, expenses or litigation purchased Shares (or to the
benefit of any person controlling such Underwriter), if a copy of an amendment
or supplement to the Prospectus correcting such untrue statement or omission
has not been sent or given to such person within the time required by the Act
and the rules and regulations promulgated thereunder, unless such failure is
the result of noncompliance by the Company with the terms of this Agreement.
This indemnity agreement will be in addition to any liability which the Company
may otherwise have.

       (b)    Each Underwriter severally, but not jointly, will indemnify and
hold harmless the Company, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls the
Company within the meaning set forth in the Act and the Selling Stockholders,
(i) against any losses, claims, damages or liabilities to which the Company or
any such director, officer or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained (A)
in the Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto, or (B) in any Blue Sky Application, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the




                                     25
<PAGE>   26
statements therein not misleading in the light of the circumstances under which
they were made, (ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any,
governmental agency or body, commenced or threatened, or of any claim, in each
case arising out of or based upon any such untrue statement or omission, if
such settlement is effected with the written consent of the Underwriters; and
(iii) against any and all expense whatsoever, as incurred (including, subject
to Section 9(d) hereof, the fees and disbursements of counsel chosen by the
indemnified parties), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim, in each
case arising out of or based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such expense
is not paid under (i) or (ii) above, and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such loss,
claim, damages, liability, action or proceeding; provided, however, that each
Underwriter will be liable in each case as provided in subsection (i), (ii) and
(iii) of this Section to the extent, but only to the extent, that such loss,
liability, claim, damage or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission that has
been made in the Registration Statement, Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto or in any Blue Sky Application in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter specifically for use in the preparation thereof or
from the failure of such Underwriter within the time required by the Act and
the Rules and Regulations to send or deliver a copy of the Prospectus (or the
Prospectus as amended or supplemented) to the person asserting any such losses,
claims, charges, liabilities or litigation, unless such failure is the result
of noncompliance by the Company with the terms of this Agreement.  This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.

       (c)    Each Selling Stockholder, severally and not jointly, will
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning set forth in the Act (i) against
any losses, claims, damages or liabilities to which such Underwriter or such
controlling person may become subject under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (A) any untrue statement or
alleged untrue statement made by such Selling Stockholder in Section 2 hereof,
or (B) any untrue statement or alleged untrue statement of any material fact
contained (x) in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, (y) in any Blue Sky
application or other document executed by such Selling Stockholder specifically
for that purpose or based upon written information furnished by such Selling
Stockholder filed in any state or other jurisdiction in order to qualify any or
all of the Shares under the securities or Blue Sky laws thereof or arise out of
or are based upon the omission or alleged omission to




                                        
                                     26
<PAGE>   27
state in the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto or in any Blue Sky Application, a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate amount paid
in settlement of any litigation, or any investigation or proceeding by any,
governmental agency or body, commenced or threatened, or of any claim, in each
case arising out of or based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, if such settlement is effected with
the written consent of such Selling Stockholder; and (iii) against any and all
expense whatsoever, as incurred (including, subject to Section 9(d) hereof, the
fees and disbursements of counsel chosen by the Underwriters), reasonably
incurred in investigating, preparing or defending against any litigation, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim, in each case arising out of or based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above, and
will reimburse promptly each Underwriter and each such controlling person for
any legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability, action or proceeding; provided, however, that Selling
Stockholders shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged omission,
made in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by such Underwriter specifically for use in the
preparation of the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto or in any Blue Sky
Application; provided further, however, that the indemnity agreement provided
in this Section with respect to any Prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any such losses, claims,
charges, liabilities, expenses or litigation purchased Shares (or to the
benefit of any person controlling such Underwriter), if a copy of an amendment
or supplement to the Prospectus correcting such untrue statement or omission
has not been sent or given to such person within the time required by the Act
and the rules and regulations promulgated thereunder, unless such failure is
the result of noncompliance by such Selling Stockholder or the Company with the
terms of this Agreement.  This indemnity agreement will be in addition to any
liability which the Selling Stockholder may otherwise have.

       (d)    In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity or
contribution may be sought pursuant to this Section 9, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing.  No
indemnification provided for in Section 9(a), (b) or (c) or contribution
provided for in Section 9(e) shall be available to any party who shall fail to
give notice as provided in this Section 9(d) if the party to whom notice was
not given was unaware of the proceeding to





                                     27
<PAGE>   28
which such notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or parties from any liability which it or they
may have to the indemnified party otherwise than on account of the provisions
of Section 9(a), (b), (c) or (d).  In case any such proceeding shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain
its own counsel at its own expense. Notwithstanding the foregoing, the
indemnifying party shall pay as incurred the reasonable fees and expenses of
the counsel retained by the indemnified party in the event (i) the indemnifying
party and the indemnified party shall have mutually agreed to the retention of
such counsel, or (ii) the named parties to any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified
party and representation of both parties by the same counsel would be
inappropriate due to material actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm for all such
indemnified parties.  Such firm shall be designated in writing by you and shall
be reasonably satisfactory to the Company in the case of parties indemnified
pursuant to Section 9(a) and 9(c) and shall be designated by the Company and
shall be reasonably satisfactory to you in the case of parties indemnified
pursuant to Section 9(b).  The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.

       (e)    If the indemnification provided for in this Section 9 is legally
unavailable to hold harmless an indemnified party under Section 9(a), (b) or
(c) above in respect of any losses, claims, damages or liabilities (or actions
or proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company, the Selling Stockholder and the
Underwriters from the offering of the Shares.  If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations.  The relative benefits received by the Company and




                                        
                                     28
<PAGE>   29
the Selling Stockholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Stockholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus.  The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Stockholders, or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

       The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9(e) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 9(e).  The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereto)
referred to above in this Section 9(e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.  Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.  The Underwriter's obligations in this Section
9(e) to contribute are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in Schedule A hereto (or such number of
Firm Shares increased as set forth in Section 10 hereof).

       (f)    In any proceeding relating to the Registration Statement, the
Preliminary Prospectus, the Prospectus or any supplement or amendment thereto
or any Blue Sky Application, the Company and the Underwriters, and each other
party against whom contribution may be sought under this Section 9, hereby
consent to the exclusive jurisdiction and venue of any court situated in the
State of Colorado, City of Denver, and all such parties agree that process
issuing from such court may be served upon him or it by any other contributing
party and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.

       10.    SUBSTITUTION OF UNDERWRITERS.

       If any Underwriter shall fail to purchase the Shares set forth opposite
its name in Schedule A hereto, and such failure to purchase shall constitute a
default by such Underwriter in its obligation to purchase the number of Shares
which it has agreed to purchase under this




                                     29
<PAGE>   30
Agreement, the non-defaulting Underwriters shall have the right and shall be
obligated to purchase (in the respective proportions which the number of Shares
set forth opposite the name of each non-defaulting Underwriter in Schedule A
hereto bears to the total number of Shares set forth opposite the names of all
the non-defaulting Underwriters in Schedule A hereto) the Shares which the
defaulting Underwriter agreed but failed to purchase; except that the non-
defaulting Underwriters shall not be obligated to purchase any of the Shares if
the total number of Shares which the defaulting Underwriter or Underwriters
agreed but failed to purchase exceed 10% of the total number of Shares, and any
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of Shares set forth its name in Schedule A hereto plus the
applicable Option Shares, if any, purchasable by it pursuant to the terms of
Section 2; provided further, that if the foregoing maximums are exceeded, the
non-defaulting Underwriters, and any other underwriters satisfactory to you who
so agree, shall have the right, but shall not be obligated, to purchase (in
such proportions as may be agreed upon among them) all the Shares.  If the
non-defaulting Underwriters or the other underwriters satisfactory to you do
not elect to purchase the Shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter or the Company
except for the payment of expenses to be borne by the Company and the
Underwriters as provided in Section 7 and the indemnity and contribution
agreement of the Company and the Underwriters contained in Section 9 hereof.

       If any of the Underwriters shall fail to purchase the entire number of
shares set forth opposite its name and such failure to purchase shall not
constitute a default by such Underwriter in the performance of its obligations
under this Agreement, the remaining Underwriters shall have the right, but
shall not be obligated, to take up and pay for (in such proportions as may be
agreed upon among them) the entire amount (but not less than all) of the Shares
which all withdrawing Underwriters agreed but failed to purchase.  Nothing
contained herein shall relieve a defaulting Underwriter of any liability it may
have for damages caused by its default.  If the other underwriters satisfactory
to you are obligated or agree to purchase the Shares of a defaulting
Underwriter, either you or the Company may postpone the Closing Date for up to
seven (7) full Business Days in order to effect any changes that may be
necessary in the Registration Statement or Prospectus or in any other document
or agreement, and to file promptly any amendment or any supplements to the
Registration Statement or the Prospectus which in you opinion may thereby be
made necessary.

       11.    NOTICES.

       All communications hereunder shall be in writing and, except as
otherwise provided herein, will be mailed, delivered or sent by facsimile or
telex as follows: (a) if to the Company, at the office of the Company, 12005 N.
Burgard, Portland, Oregon 97203 (Facsimile:(503) 240-6615), with a copy to Ater
Wynne Hewitt Dodson & Skerritt, LLP, 222




                                        
                                     30
<PAGE>   31
S.W. Columbia, Suite 1800, Portland, Oregon 97201, Attention:  Gregory E.
Struxness (Facsimile: (503) 226-0079), (b) if to the Underwriters, to the
Underwriters at the offices of Hanifen, Imhoff Inc., 1125  17th Street, Suite
1600, Denver, Colorado 80202, Attention: Corporate Finance Department
(Facsimile: (303) 291-5470) with a copy to Gibson, Dunn & Crutcher LLP, 1801
California Street, Suite 4100, Denver, Colorado 80202, Attention: Thomas R.
Denison, Esq. (Facsimile: (303) 296-5310), and (c) if to the Selling
Stockholders, to the addresses set forth on Exhibit B, with a copy to Stoel
Rives LLP, 900 S.W. 5th Avenue, Portland, Oregon, 97206 (Facsimile (503)
220-2480).

       12.    EFFECTIVE DATE AND TERMINATION.

       This Agreement shall become effective at [   ] Pacific Time, on the date
hereof.  Until this Agreement is effective, it may be terminated by the Company
by giving notice to the Underwriters or by the Underwriters by giving notice to
the Company, except that the provisions of Section 7 and 9 shall at all time be
effective.  This Agreement may be terminated at any time on or prior to each
Closing Date by the Underwriters by notice to the Company as follows:

       (a)    At any time prior to the Closing Date if any of the following has
occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any material adverse change in,
or any adverse development which materially affects the business, condition
(financial and otherwise), results of operations, properties or prospects of
the Company and the Subsidiaries, taken as a whole, whether or not arising in
the ordinary course of business, (ii) trading in any of the equity securities
of the Company shall have been suspended by the Commission, by the exchange
that lists the Shares, or by the NASDAQ, (iii) any outbreak or escalation of
hostilities or declaration of war or national emergency after the date hereof
or other national or international calamity or crises if the effect of such
outbreak, escalation, declaration, emergency, calamity or crises would, in your
judgment, make the offering or delivery of the Shares impracticable or
inadvisable, (iv) suspension or limitation of trading in securities on the New
York Stock Exchange, the American Stock Exchange, Nasdaq National Market, the
Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade or limitation on prices for securities on any such
exchange or quotation system, (v) additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by any such exchange or quotation
system or by order of the Commission or any court or other governmental
authority, (vi) declaration of a banking moratorium by either federal or New
York authorities or (vii) if there shall have been such a material change in
general economic, political or financial conditions or if the effect of
international conditions on the financial markets in the United States shall be
such as, in you judgment, makes it impracticable or inadvisable to proceed with
the delivery of the Shares; or

       (b)    As provided in Sections 8 and 10 of this Agreement.




                                     31
<PAGE>   32
       If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Sections 8 and 10 hereof.  If this Agreement is
terminated pursuant to this Section, you shall notify the Company thereof
promptly by telephone or facsimile, confirmed by express mail.

       13.    REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.

       The indemnity and contribution agreements contained in Section 9 and the
representations, warranties and agreements of the Company and the Selling
Stockholders in Sections 1, 2, 5, 6 and 7 hereof shall survive the delivery of
the Shares to the Underwriters hereunder and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any Underwriter or other indemnified
party.

       14.    INFORMATION FURNISHED BY UNDERWRITERS.

       The statements set forth in the last two paragraphs of the cover page
and under the caption "Underwriting" in any Preliminary Prospectus and in the
Prospectus constitute the only written information furnished by or on behalf of
any Underwriter.

       15.    SUCCESSORS.

       This Agreement has been and is made solely for the benefit of the
Underwriters, the Selling Stockholders and the Company and their respective
successors, executors, administrators, heirs and assigns, and the officers,
directors and controlling persons referred to in Section 9, and no other person
will acquire or have any right or obligation hereunder.  The term "successors
and assigns" shall not include any purchaser of any of the Shares merely by
reason of such purchase.

       16.    MARKET STAND-OFF.

       Each Seller hereby agrees that, without your prior written consent, it
will not offer, sell, contract to sell or otherwise dispose of any shares of
Common Stock of the Company or any securities convertible into or exercisable
or exchangeable for such Common Stock for a period of 90 days after the date of
the public offering of the Shares, other than (i) the Shares to be sold
hereunder; or (ii) any shares of such Common Stock sold upon the exercise of an
option or warrant outstanding on the date hereof or upon the conversion of a
security outstanding on the date hereof into shares of such Common Stock.  The
Company will not file any registration statement with respect to any capital
stock of the Company with the Commission for a period of 90 days after the date
of the public offering of the Shares other than registration statements on form
S-8 relating to the Company's 1995 Stock Incentive Plan and the Company's 1995
Stock Option Plan for Non Employee Directors.





                                     32
<PAGE>   33
       17.    MISCELLANEOUS.

       For purposes of this Agreement, "Business Day" means any day on which
the New York Stock Exchange, Inc. is open for trading and "Subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.

       Except as otherwise provided herein, this Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all other agreements and understandings.

       This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

       In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

       This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York without giving effect to the choice of law or
conflicts of law principles thereof.

       If the foregoing letter is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the several
Underwriters in accordance with its terms.


                                        Very truly yours,

                                        Northwest Pipe Company

                                        By:
                                        Its:

                                        The Selling Stockholders named in
                                        Schedule B hereto, acting severally:

                                        By:
                                        Attorney-in-Fact

                                        The foregoing Underwriting Agreement
                                        is hereby confirmed and accepted
                                        as of the date first above written:

                                        HANIFEN, IMHOFF INC.




                                     33
<PAGE>   34


                                        STEPHENS INC.
                                        JENSEN SECURITIES CO.



                                        By:

                                        HANIFEN, IMHOFF INC.
                                        By:
                                        Its:





                                     34
<PAGE>   35




                                 SCHEDULE A

                                 (NUMBER OF

                          UNDERWRITER FIRM SHARES)

UNDERWRITER                               FIRM SHARES
- -----------                               -----------
HANIFEN, IMHOFF INC.
STEPHENS INC.
JENSEN SECURITIES CO.
                                                         ---------
Total                                                    2,400,000






<PAGE>   36




                                   SCHEDULE B

                              SELLING STOCKHOLDERS

Selling Stockholder           Number of Firm Shares      Number of Option Shares





Underwriting Agreement
<PAGE>   37




                                   SCHEDULE C

                             OFFICERS AND DIRECTORS







<PAGE>   1
 
                                                                    EXHIBIT 11.0
 
                             NORTHWEST PIPE COMPANY
 
                      COMPUTATION OF NET INCOME PER SHARE
   
       (DOLLAR AND SHARE AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
    
 
   
<TABLE>
<CAPTION>
                                                                                 NINE MONTHS ENDED
                                                  YEAR ENDED DECEMBER 31,          SEPTEMBER 30,
                                                ----------------------------     -----------------
                                                 1993       1994       1995       1995       1996
                                                ------     ------     ------     ------     ------
<S>                                             <C>        <C>        <C>        <C>        <C>
Net income as reported........................  $  263     $2,161     $5,107     $3,492     $8,046
Reduction in interest as a result of
  conversion of the Series B and Series C
  Convertible Subordinated Debentures, net of
  tax.........................................      58        136        178        133
                                                ------     ------     ------     ------     ------
Net income....................................  $  321     $2,297     $5,285     $3,625     $8,046
                                                ======     ======     ======     ======     ======
Earnings per share
  Income (loss) before cumulative effect of
     accounting change........................  $(0.27)    $ 0.65     $ 1.43     $ 1.03     $ 1.45
Cumulative effect of accounting change........    0.43
                                                ------     ------     ------     ------     ------
Earnings per share............................  $ 0.16     $ 0.65     $ 1.43     $ 1.03     $ 1.45
                                                ======     ======     ======     ======     ======
Weighted average shares outstanding:
  Common stock................................     698        698        836        698      5,281
  Common stock issuable upon exercise of stock
     options..................................     120        199        230        224        256
  Conversion of Series B and Series C
     Convertible Subordinated Debentures......   1,133      2,629      2,269      2,629
                                                ------     ------     ------     ------     ------
Shares used in per share calculations.........   1,951      3,526      3,695      3,551      5,537
                                                ======     ======     ======     ======     ======
</TABLE>
    

<PAGE>   1
 
                                                                    EXHIBIT 24.2
 
                       CONSENT OF INDEPENDENT ACCOUNTANTS
 
   
     We consent to the inclusion in this registration statement on Form S-1
(File No. 333-13209) of our reports, dated February 13, 1996, except for Note
12, for which the date is October 15, 1996, on our audits of the financial
statements and financial statement schedule of Northwest Pipe Company. Such
report on the financial statements includes an emphasis of matter concerning a
claim by the United States Environmental Protection Agency and an explanatory
paragraph with respect to a change in method of accounting for income taxes in
1993. We also consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts."
    

                                          /s/ COOPERS & LYBRAND L.L.P. 
                                          COOPERS & LYBRAND L.L.P.
 
Portland, Oregon
   
October 21, 1996
    

<PAGE>   1
 
                                                                    EXHIBIT 24.4
 
                       CONSENT OF INDEPENDENT ACCOUNTANTS
 
   
     We consent to the inclusion in this registration statement on Form S-1
(File No. 333-13209) of our report, dated February 25, 1996, except for Notes 7
and 8, as to which the date is March 14, 1996, on our audits of the consolidated
financial statements of Thompson Pipe and Steel Company and subsidiary. We also
consent to the reference to our firm under the captions "Selected Financial
Data" and "Experts."
    

                                          /s/ COOPERS & LYBRAND L.L.P. 
                                          COOPERS & LYBRAND L.L.P.
 
Denver, Colorado
   
October 21, 1996
    


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