Strategy During the past year, the Company remained committed to it growth strategy. The growth in 2000, however, came primarily from internal initiatives. We did not acquire any businesses, but rather focused on integrating and improving the performance of our recent investments. We expect to continue this internal focus for the coming year as we seek greater utilization of existing assets and improved earnings from our current facilities. In Water Transmission, this strategy means that we will take advantage of strong existing markets for water infrastructure and pursue opportunities to expand our markets through aggressive marketing. In both water pipelines and specialty fabrication, we will pursue projects throughout the country and seek to fill unused capacity at each of our seven facilities. For Tubular Products, this strategy calls for us to stay close to our customers and respond to changing market conditions. The Tubular Products Group manufactures a wide range of products and must be flexible enough to respond to new opportunities. An example of this flexibility is our increased involvement in the energy markets. Because of increased exploration, the Group is developing new products to service a growing oil and gas market. The Group has and will continue to adjust its product mix to optimize financial returns. Although we are reporting mixed results for 2000, with record sales but reduced earnings, we believe market conditions and actions we have taken operationally will contribute to a strong year in 2001. We are grateful to our employees, customers, shareholders, and suppliers. The relationships we have developed with each group are key to the continued success of Northwest Pipe Company. William R. Tagmyer Chairman of the Board and Chief Executive Officer Brian W. Dunham President and Chief Operating Officer Northwest Pipe Company | 3