10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

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

For the quarterly period ended: September 30, 2011

OR

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

For the transition period from            to            

Commission File Number: 0-27140

NORTHWEST PIPE COMPANY

(Exact name of registrant as specified in its charter)

OREGON	93-0557988
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5721 SE Columbia Way

Suite 200

Vancouver, Washington 98661

(Address of principal executive offices and zip code)

360-397-6250

(Registrant’s telephone number including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

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

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

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

Common Stock, par value $.01 per share	9,371,111
(Class)	(Shares outstanding at April 23, 2012)

NORTHWEST PIPE COMPANY

FORM 10-Q

INDEX

	Page
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets as of September 30, 2011 and December  31, 2010 (as Restated)		3
Condensed Consolidated Statements of Operations for the three and nine months ended September  30, 2011 and 2010 (as Restated)		4
Condensed Consolidated Statements of Cash Flows for the nine months ended September  30, 2011 and 2010 (as Restated)		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		25
Item 4. Controls and Procedures		26
PART II—OTHER INFORMATION
Item 1. Legal Proceedings		28
Item 1A. Risk Factors		28
Item 5. Other Information		28
Item 6. Exhibits		28
Signatures		30

1

EXPLANATORY NOTE

In this Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 (the “September 2011 Form 10-Q”), Northwest Pipe Company (“the Company”) is restating its previously reported unaudited condensed consolidated financial statements as of September 30, 2010 and December 31, 2010, and for the three and nine months ended September 30, 2010 in Part I—Item 1, “Financial Statements” to correct material errors identified in such previously issued financial statements. In this filing the Company is also updating Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect the effects of the restatement as it relates to the three and nine months ended September 30, 2010. Except as required to reflect the effects of the restatement for the items above, no additional modifications or updates to the consolidated financial statements or data in this Form 10-Q have been made to the consolidated financial statements or data for the three and nine months ended September 30, 2010.

For further detail on the financial statement impacts and the adjustments made as a result of the restatement, see Note 14 of the Condensed Consolidated Financial Statements in Part I—Item 1, “Financial Statements.”

Concurrent with the filing of this September 2011 Form 10-Q, the Company is filing its Annual Report on Form 10-K for the year ended December 31, 2011 (the “2011 Form 10-K”), which contains restated financial statements as of December 31, 2010 and for the years ended December 31, 2010 and December 31, 2009. The December 31, 2010 condensed consolidated balance sheet included in this September 2011 Form 10-Q reflects the restated information included in our 2011 Form 10-K. Also concurrent with this report, the Company is filing its amended Quarterly Reports on Form 10-Q/A for the quarters ended March 31, 2011 and June 30, 2011 which include the restatement of financial statements as of and for the three months ended March 31, 2011 and March 31, 2010 and as of and for the three and six months ended June 30, 2011 and June 30, 2010, respectively.

Ineffectiveness of Internal Control over Financial Reporting and Disclosure Controls and Procedures

The Company has determined that certain material weaknesses in its internal controls continued to exist as of September 30, 2011. For a description of the material weaknesses in our internal control over financial reporting and our plan to remediate those material weaknesses, see Part I -Item 4, “Controls and Procedures” of this report. In addition, as a result of the existence of material weaknesses in our internal controls, we have also concluded that our disclosure controls and procedures were not effective as of September 30, 2011.

2

NORTHWEST PIPE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

	September 30, 2011			December 31, 2010 As Restated
Assets
Current assets:
Cash and cash equivalents	$	72		$	51
Trade and other receivables, less allowance for doubtful accounts of $2,118 and $2,151		85,181			66,474
Costs and estimated earnings in excess of billings on uncompleted contracts		47,621			45,533
Inventories		91,889			80,887
Refundable income taxes		—			15,099
Deferred income taxes		7,481			6,293
Prepaid expenses and other		2,099			2,163
Total current assets		234,343			216,500
Property and equipment, net		152,156			154,274
Goodwill		20,478			21,451
Other assets		15,565			22,658
Total assets	$	422,542		$	414,883
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	5,714		$	5,714
Current portion of capital lease obligations		3,388			3,257
Accounts payable		27,996			28,463
Accrued liabilities		21,533			11,448
Billings in excess of costs and estimated earnings on uncompleted contracts		11,095			14,808
Total current liabilities		69,726			63,690
Note payable to financial institution		62,000			68,000
Long-term debt, less current portion		13,500			17,786
Capital lease obligations, less current portion		13,156			15,705
Deferred income taxes		16,811			14,582
Other long-term liabilities		8,739			8,828
Total liabilities		183,932			188,591
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued or outstanding		—			—
Common stock, $.01 par value, 15,000,000 shares authorized, 9,348,701 and 9,298,156 shares issued and outstanding		94			93
Additional paid-in-capital		108,193			107,578
Retained earnings		131,670			120,477
Accumulated other comprehensive loss		(1,347	)		(1,856	)
Total stockholders’ equity		238,610			226,292
Total liabilities and stockholders’ equity	$	422,542		$	414,883

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

3

NORTHWEST PIPE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2011			2010         As Restated			2011			2010         As Restated
Net sales	$	139,265		$	112,770		$	394,524		$	289,277
Cost of sales		122,751			102,289			346,571			265,684
Gross profit		16,514			10,481			47,953			23,593
Selling, general and administrative expense		6,467			8,275			19,359			22,071
Operating income		10,047			2,206			28,594			1,522
Other expense (income)		950			138			1,347			(289	)
Interest income		(4	)		(216	)		(27	)		(643	)
Interest expense		2,247			2,463			7,440			6,234
Income (loss) before income taxes		6,854			(179	)		19,834			(3,780	)
Provision for (benefit from) income taxes		3,570			(45	)		8,641			(996	)
Net income (loss)	$	3,284		$	(134	)	$	11,193		$	(2,784	)
Basic earnings (loss) per share	$	0.35		$	(0.01	)	$	1.20		$	(0.30	)
Diluted earnings (loss) per share	$	0.35		$	(0.01	)	$	1.20		$	(0.30	)
Shares used in per share calculations:
Basic		9,346			9,290			9,326			9,273
Diluted		9,373			9,290			9,359			9,273

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

4

NORTHWEST PIPE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine months ended September 30,
	2011			2010          As Restated
Cash Flows From Operating Activities:
Net income (loss)	$	11,193		$	(2,784	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		10,703			10,221
Amortization of intangible assets		50			156
Allowance on notes receivable		4,071			—
Provision for doubtful accounts		(33	)		(124	)
Equity in earnings of unconsolidated subsidiary, net of dividends received		394			192
Amortization of debt issuance costs		1,532			905
Deferred income taxes		1,041			4,151
Loss on disposal of property and equipment		180			228
Gain on sale of business		(2,887	)		—
Stock based compensation expense		519			594
Tax benefit from stock option plans		—			31
Unrealized gain on foreign currency forward contracts		(804	)		(687	)
Changes in operating assets and liabilities:
Trade and other receivables, net		(21,468	)		(36,866	)
Costs and estimated earnings in excess of billings on uncompleted contracts, net		(5,801	)		(8,482	)
Inventories		(14,549	)		(6,419	)
Refundable income taxes		15,099			(3,255	)
Prepaid expenses and other assets		1,087			1,616
Accounts payable		(1,333	)		3,308
Accrued and other liabilities		10,508			2,341
Net cash provided by (used in) operating activities		9,502			(34,874	)
Cash Flows From Investing Activities:
Additions to property and equipment		(11,496	)		(15,537	)
Proceeds from sale of business		13,727			—
Proceeds from the sale of property and equipment		96			18
Issuance of notes receivable		—			(450	)
Insurance proceeds		—			321
Other investing activities		800			—
Net cash provided by (used in) investing activities		3,127			(15,648	)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock		146			—
Tax withholdings related to net share settlements of restricted stock awards and performance shares		(51	)		(87	)
Payments on long-term debt		(4,286	)		(4,286	)
Borrowings under note payable to financial institution		109,050			159,977
Payments on note payable to financial institution		(115,050	)		(102,867	)
Borrowings from capital lease obligations		—			2,865
Payments on capital lease obligations		(2,417	)		(1,759	)
Payments of debt amendment costs		—			(3,315	)
Net cash provided by (used in) financing activities		(12,608	)		50,528
Change in cash and cash equivalents		21			6
Cash and cash equivalents, beginning of period		51			31
Cash and cash equivalents, end of period	$	72		$	37
Non-cash investing activity:
Escrow account related to capital lease financing	$	2,726		$	2,726
Accrued property and equipment purchases		1,834			1,725

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

5

NORTHWEST PIPE COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company is filing this September 2011 Form 10-Q concurrently with the filing of the Annual Report on Form 10-K for the year ended December 31, 2011 (the “2011 Form 10-K”). The financial information as of December 31, 2010 is derived from the audited consolidated financial statements presented in the Northwest Pipe Company (the “Company”) 2011 Form 10-K. Certain information or footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments necessary (which are of a normal and recurring nature) for the fair statement of the results of the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2011, as presented in the Company’s 2011 Annual Report on Form 10-K.

On April 1, 2011, the Company sold its interest in Northwest Pipe Asia Pte. Ltd. (“NWPA”), which was previously accounted for under the equity method of accounting. See Note 12 of the Condensed Consolidated Financial Statements for further information regarding the sale.

On August 1, 2011, the Company entered into an agreement which converted $2.3 million of loans and accrued interest outstanding with Lucid Energy Technologies, Inc., which have been accounted for as research and development expense within selling, general and administrative expense (see Note 14), into 50 percent ownership of Lucid Energy LLC (“Lucid Energy”). Lucid Energy is a clean energy company based in Portland, Oregon. Lucid Energy, in which the Company exercises significant influence but does not control, is accounted for under the equity method of accounting. The Condensed Consolidated Financial Statements include the accounts of Northwest Pipe Company and its subsidiaries in which the Company exercises control as of the financial statement date. Intercompany accounts and transactions have been eliminated.

Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2011.

2. Inventories

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

	September 30, 2011		December 31, 2010
Short-term inventories:
Raw materials	$	67,547	$	58,610
Work-in-process		2,220		2,521
Finished goods		19,799		17,566
Supplies		2,323		2,190
		91,889		80,887
Long-term inventories:
Finished goods		2,436		2,554
Total inventories	$	94,325	$	83,441

The lower of cost or market adjustment was $4.3 million at September 30, 2011 and $4.5 million at December 31, 2010. Long-term inventories are recorded in other assets.

6

3. Fair Value Measurements

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

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

The following table summarizes information regarding the Company’s financial assets and financial liabilities that are measured at fair value on a recurring basis (in thousands):

Description	Balance at September 30, 2011			Level 1		Level 2			Level 3
Financial Assets
Escrow account	$	2,726		$	2,726	$	—		$	—
Deferred compensation plan assets		4,531			4,531		—			—
Derivatives		805			—		805			—
Total Assets	$	8,062		$	7,257	$	805		$	—
Financial Liabilities
Derivatives	$	(48	)	$	—	$	(48	)	$	—
Description	Balance at December 31, 2010			Level 1		Level 2			Level 3
Financial Assets
Escrow account	$	2,726		$	2,726	$	—		$	—
Deferred compensation plan assets		4,560			4,560		—			—
Total Assets	$	7,286		$	7,286	$	—		$	—
Financial Liabilities
Derivatives	$	(622	)	$	—	$	(622	)	$	—

The escrow account, consisting of a money market mutual fund, is valued using quoted market prices in active markets classified as Level 1 within the fair value hierarchy. The deferred compensation plan assets consists of cash and several publicly traded stock and bond mutual funds, valued using quoted market prices in active markets classified as Level 1 within the fair value hierarchy. The Company’s derivatives consist of foreign currency cash flow hedges and are valued using various pricing models or discounted cash flow analyses that incorporate observable market parameters, such as interest rate yield curves and currency rates, and are classified as Level 2 within the valuation hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or the Company.

The net carrying amounts of cash and cash equivalents, trade and other receivables, refundable income taxes, accounts payable, accrued liabilities and note payable to financial institution approximate fair value due to the short-term nature of these instruments. Similarly, the Company believes the carrying value of its long-term debt also approximates fair value in that the interest rates and scheduled maturities applicable of the outstanding borrowings approximate interest rates and terms available for the same or similar loans.

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

We measure our financial assets, including loans receivable and non-marketable equity method investments, at fair value on a non-recurring basis when they are determined to be other-than-temporarily impaired. The fair value of these assets is determined using Level 3 unobservable inputs due to the absence of observable market inputs and the valuations requiring management judgment. During the three and nine months ended September 30, 2011, we recognized $0.9 million and $4.1 million, respectively, of impairment charges on loans receivable. There were no impairment charges taken during the three and nine months ended September 30, 2010. The impairment charges were included in other expense (income) in the consolidated statement of income. All loans receivable are categorized as Level 3 in the fair value hierarchy.

7

4. Derivative Instruments and Hedging Activities

The Company conducts business in various foreign countries and, from time to time, settles transactions in foreign currencies. The Company has established a program that utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures, typically arising from sales contracts denominated in Canadian currency. These derivative contracts are consistent with the Company’s strategy for financial risk management. The Company uses cash flow hedge accounting treatment for qualifying foreign currency forward contracts. The Company initially reports any gain or loss on the effective portion of a cash flow hedge as a component of other comprehensive income and subsequently reclassifies any gain or loss to net sales when the underlying hedged revenue is recorded. Instruments that do not qualify for cash flow hedge accounting treatment are re-measured at fair value on each balance sheet date and resulting gains and losses are recognized in net income. As of September 30, 2011 and December 31, 2010, the total notional amount of the derivative contracts not designated as hedges was $2.6 million (CAD$2.7 million) and $1.3 million (CAD$1.3 million), respectively. As of September 30, 2011 and December 31, 2010, the total notional amount of the derivative contracts designated as hedges was $15.3 million (CAD$16.0 million) and $15.1 million (CAD$15.0 million), respectively.

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

There were no Canadian forward contracts with maturities longer than 12 months at September 30, 2011.

The balance sheet location and the fair values of derivative instruments are (in thousands):

Foreign Currency Forward Contracts	September 30, 2011		December 31, 2010
Assets
Derivatives designated as hedging instruments
Prepaid expenses and other	$	272	$	—
Derivatives not designated as hedging instruments
Prepaid expenses and other		533		—
Total assets	$	805	$	—
Liabilities
Derivatives designated as hedging instruments
Accrued liabilities	$	—	$	317
Derivatives not designated as hedging instruments
Accrued liabilities		48		305
Total liabilities	$	48	$	622

8

The amounts of the gains and losses related to the Company’s derivative contracts designated as hedging instruments for the three and nine months ended September 30, 2011 and September 30, 2010 are (in thousands):

			Pretax Gain (Loss) Recognized in Comprehensive Income on Effective Portion of Derivative
			Three months ended September 30,						Nine months ended September 30,
			2011			2010			2011			2010
Derivatives in Cash Flow Hedging Relationships
Foreign currency forward contracts			$	357		$	(24	)	$	4		$	134
			Pretax Gain (Loss) Recognized in Income on Effective Portion of Derivative as a Result of Reclassification from Accumulated Other Comprehensive Loss
			Three months ended September 30,						Nine months ended September 30,
	Location		2011			2010			2011			2010
Derivatives in Cash Flow Hedging Relationships
Foreign currency forward contracts		Net sales	$	(52	)	$	5		$	(558	)	$	(8	)
			Loss on Ineffective Portion of Derivative and Amount Excluded from Effectiveness Testing Recognized in Income
			Three months ended September 30,						Nine months ended September 30,
	Location		2011			2010			2011			2010
Derivatives in Cash Flow Hedging Relationships
Foreign currency forward contracts		Net sales	$	(15	)	$	(27	)	$	(72	)	$	(29	)

At September 30, 2011, there are $291,000 of deferred pretax gains on outstanding derivatives accumulated in other comprehensive loss, a majority of which is expected to be reclassified to net sales within the next 12 months as a result of underlying hedged transactions also being recorded in net sales.

For the three and nine months ended September 30, 2011, gains from our derivative contracts not designated as hedging instruments recognized in net sales were $0.9 million and $0.3 million, respectively. For the three and nine months ended September 30, 2010, losses from our derivative contracts not designated as hedging instruments recognized in net sales were $0.3 million and $0.4 million, respectively.

5. Commitments and Contingencies

Class Action and Derivative Lawsuits

On November 20, 2009, a complaint against the Company, captioned Richard v. Northwest Pipe Co. et al., No. C09-5724 RBL (“Richard”), was filed in the United States District Court for the Western District of Washington. The plaintiff is allegedly a purchaser of the Company’s stock. In addition to the Company, Brian W. Dunham, the Company’s former President and Chief Executive Officer, and Stephanie J. Welty, the Company’s former Chief Financial Officer, are named as defendants. The complaint alleges that defendants violated Section 10(b) of the Securities Exchange Act of 1934 by making false or misleading statements between April 23, 2008 and November 11, 2009. Plaintiff seeks to represent a class of persons who purchased the Company’s stock during the same period, and seeks damages for losses caused by the alleged wrongdoing.

A similar complaint, captioned Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund v. Northwest Pipe Co. et al., No. C09-5791 RBL (“Plumbers”), was filed against the Company in the same court on December 22, 2009. In addition to the Company, Brian W. Dunham, Stephanie J. Welty and William R. Tagmyer, the Company’s current Chairman of the Board, are named as defendants in the Plumbers complaint. In the Plumbers complaint, as in the Richard complaint, the plaintiff is allegedly a purchaser of the Company’s stock and asserts that defendants violated Section 10(b) of the Securities Exchange Act of 1934 by making false or misleading statements between April 23, 2008 and November 11, 2009. Plaintiff seeks to represent a class of persons who purchased the Company’s stock during that period, and seeks damages for losses caused by the alleged wrongdoing.

9

The Richard action and the Plumbers action were consolidated on February 25, 2010. Plumbers and Pipefitters Local No. 630 Pension-Annuity Trust Fund was appointed lead plaintiff in the consolidated action. Defendants and lead plaintiff subsequently agreed that defendants did not need to respond immediately to either of the two outstanding complaints, and that a consolidated amended complaint would be filed within 45 days of the Company having completed the filing of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 and the 2009 Form 10-K with the SEC. A consolidated amended complaint was filed by the plaintiff on December 21, 2010, and our motion to dismiss was filed on February 25, 2011, as were similar motions filed by the individual defendants. Briefing on those motions concluded on May 24, 2011. On August 26, 2011, the Court denied all defendants’ motions to dismiss, and the Company filed its answer to the consolidated amended complaint on October 24, 2011. The parties have conducted limited discovery and participated in an initial settlement mediation on January 30, 2012, with additional sessions anticipated in the future. By agreement of the parties, no further discovery will take place until after the mediation process is exhausted. The Company intends to vigorously defend itself against these claims. This securities litigation is at an early stage and, at this time, it is not possible to predict its outcome. Therefore, the Company has not accrued any charges related to this litigation.

On March 3, 2010, the Company was served with a derivative complaint, captioned Ruggles v. Dunham et al., No. C10-5129 RBL (“Ruggles”), and filed in the United States District Court for the Western District of Washington. The plaintiff in this action is allegedly a current shareholder of the Company. The Company is a nominal defendant in this litigation. Plaintiff seeks to assert, on the Company’s behalf, claims against Brian W. Dunham, Stephanie J. Welty, William R. Tagmyer, Keith R. Larson, Wayne B. Kingsley, Richard A. Roman, Michael C. Franson and Neil R. Thornton. The asserted basis of the claims is that defendants breached fiduciary duties to the Company by causing the Company to make improper statements between April 23, 2008 and August 7, 2009. Plaintiff seeks to recover, on the Company’s behalf, damages for losses caused by the alleged wrongdoing.

On September 23, 2011, the Company was served with a derivative complaint, captioned Grivich v. Dunham, et al., No. 11-2-03678-6 (“Grivich”), and filed in the Superior Court of Washington for Clark County. The plaintiff in this action is allegedly a current shareholder of the Company. The Company is a nominal defendant in this litigation. Plaintiff seeks to assert, on the Company’s behalf, claims against Brian W. Dunham, Stephanie J. Welty, William R. Tagmyer, Keith R. Larson, Wayne B. Kingsley, Richard A. Roman, Michael C. Franson and Neil R. Thornton. The asserted basis of the claims is that defendants breached fiduciary duties to the Company between April 2, 2007 and the date of the Complaint. Plaintiff seeks to recover, on the Company’s behalf, damages for losses caused by the alleged wrongdoing.

On October 14, 2011, another derivative complaint, captioned Richard v. Dunham, et al., No. 11-2-04080-5 (“Richard Deriv.”), was filed in the Superior Court of Washington for Clark County. The plaintiff in this action is allegedly a current shareholder of the Company. The Company is a nominal defendant in this litigation. Plaintiff seeks to assert, on the Company’s behalf, claims against Brian W. Dunham, Stephanie J. Welty, William R. Tagmyer, Keith R. Larson, Wayne B. Kingsley, Richard A. Roman, Michael C. Franson and Neil R. Thornton. The asserted basis of the claims is that defendants breached fiduciary duties to the Company between April 2, 2007 and the date of the Complaint. Plaintiff seeks to recover, on the Company’s behalf, damages for losses caused by the alleged wrongdoing.

An amended complaint in the Ruggles action was filed on November 10, 2011, and the defendant responded to the complaint by filing a motion to dismiss, which motion is still pending. The derivative parties participated in the initial settlement mediation described above and will participate in any follow up sessions. It should also be noted that derivative claims by their nature do not seek to recover damages from the Company, but purport instead to seek to recover damages for the benefit of the Company. These cases are at a very early stage and, at this time, it is not possible to predict their outcome. Therefore, the Company has not accrued any charges related to them.

SEC Investigation

On March 8, 2010, the staff of the Enforcement Division of the SEC advised our counsel that they had obtained a formal order of investigation with respect to matters related to the Audit Committee investigation. We are cooperating fully with the SEC in connection with these matters. We cannot predict if, when or how they will be resolved or what, if any, actions we may be required to take as part of any resolution of these matters. Any action by the SEC or other governmental agency could result in civil or criminal sanctions against us and/or certain of our current and former officers, directors and employees. The investigation is at an early stage and, at this time, it is not possible to predict its outcome. Therefore, we have not accrued any charges related to this investigation.

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Other Matters

On December 1, 2000, a section of the lower Willamette River known as the Portland Harbor was included on the National Priorities List at the request of the U.S. Environmental Protection Agency (the “EPA”). While the Company’s Portland, Oregon manufacturing facility does not border the Willamette River, an outfall from the facility’s storm water system drains into a neighboring property’s privately owned stormwater system and slip. Since the listing of the site, the Company was notified by the EPA and the Oregon Department of Environmental Quality (the “ODEQ”) of potential liability under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). In 2008, the Company was asked to file information disclosure reports with the EPA (CERCLA 104 (e) information request). By agreement with the EPA, the ODEQ is responsible for overseeing remedial investigation and source control activities for all upland sites to investigate sources and prevent future contamination to the river. A remedial investigation and feasibility study (RI/FS) of the Portland Harbor is currently being directed by a group of potentially responsible parties known as the Lower Willamette Group (the “LWG”). The Company made a payment of $175,000 to the LWG in June 2007 as part of an interim settlement, and is under no obligation to make any further payment. A draft remedial investigation report was submitted to the EPA by the LWG in the fall of 2009; the final draft remedial investigation was submitted to EPA in the fall of 2011. The feasibility study is underway, and a draft is expected to be completed by the LWG in the spring of 2012.

In 2001, groundwater containing elevated organic compounds (“VOCs”) was identified in one localized area of property leased adjacent to the Portland facility furthest from the river. Assessment work in 2002 and 2003 to further characterize the groundwater is consistent with the initial conclusion that the source of the VOC’s is located off of Company-owned property. In February 2005, the Company entered into a Voluntary Agreement for Remedial Investigation and Source Control Measures (“Agreement”) with the ODEQ. The Company is one of 90 Upland Source Control Sites working with the ODEQ on Source Control and is ranked a “medium” priority. The Company performed Remedial Investigation work required under the Agreement and submitted a draft Remedial Investigation/Source Control Evaluation Report on December 30, 2005. The conclusions of the report indicated that the VOCs found in the groundwater do not present an unacceptable risk to human or ecological receptors in the Willamette River. The report also indicated there is no evidence at this time showing a connection between detected VOCs in groundwater and Willamette River sediments. In 2009, the ODEQ requested the Company to revise its Remedial Investigation/Source Control Evaluation Report from 2005 to include recent information available related to nearby properties. The Company expects to submit an Expanded Risk Assessment for the VOC’s in Groundwater during or after the first quarter of 2012, following the completion of a paving project at the Portland facility.

Also, based on the remedial investigation and reporting required under the Portland, Oregon manufacturing facility’s National Pollutant Discharge Elimination System permit for storm water, the Company and the ODEQ have identified small amounts of polynuclear aromatic hydrocarbons (PAHs) and polychlorinated biphenyls (PCBs) and trace amounts of zinc in storm water. Storm water from the Portland, Oregon manufacturing facility site is discharged into a communal storm water system that ultimately discharges into a neighboring property’s privately owned slip. The slip was historically used for shipbuilding and subsequently for ship breaking and metal recycling. Studies of the river sediments have revealed concentration of PAHs, PCBs, and zinc, which are common constituents in urban storm water discharges. To minimize the zinc traces in its storm water, the Company painted a substantial part of the Portland facility’s roofs and made certain paving improvements at the Portland facility. In June 2009, under the ODEQ Agreement, the Company submitted a Final Supplemental Work Plan to evaluate and assess soil and storm water, and further assess groundwater risk. In May 2010, the Company submitted a remediation plan related to soil contamination, which ODEQ approved in August 2010. Since August 2010, the Company has been engaged in performing the approved remediation plan which has included an upgrade to the fuel and waste storage systems (completed in the fourth quarter of 2011) and a storm water filtration system ( completed in the first quarter of 2012). The remediation plan also required the excavation of a localized soil area to remove soil containing PAHs (completed in the third quarter of 2011). During the localized soil excavation in the third quarter of 2011, additional stained soil was discovered, and at the request of ODEQ, the Company is developing an additional Work Plan to characterize the nature and extent of soil and/or groundwater impacts from the staining. The Company spent approximately $926,000 during 2011 to address storm water system upgrades and soil remediation, and expects to spend an additional $1.6 million in 2012 to complete the work specified in the Work Plans.

Concurrent with the activities of the EPA and the ODEQ, the Portland Harbor Natural Resources Trustee Council (“Trustees”) sent some or all of the same parties, including the Company, a notice of intent to perform a Natural Resource Damage Assessment (“NRDA”) for the Portland Harbor Site to determine the nature and extent of natural resource damages under CERCLA section 107. The Trustees for the Portland Harbor Site consist of representatives from several Northwest Indian Tribes, three federal agencies and one state agency. The Trustees act independently of the EPA and the ODEQ. In 2009, the Trustees completed phase one of their three-phase NRDA. Phase one of the NRDA consisted of environmental studies to fill gaps in the information available from the EPA, and development of a framework for evaluating, quantifying and determining the extent of injuries to the natural resource. Phase two of the NRDA began in 2010 and consists largely of implementing the framework developed in phase one.

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The Trustees have encouraged potentially responsible parties to voluntarily participate in the funding of their injury assessments and several of those parties have agreed to do so. In 2009, one of the Tribal Trustees (the Yakima Nation) resigned and has requested funding from the same parties to support its own assessment. The Company has not assumed any payment obligation or liability related to either request. The extent of the Company’s obligation with respect to Portland Harbor matters is not known, and no further adjustment to the consolidated financial statements has been recorded as of September 30, 2011.

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

From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of its business. The Company maintains insurance coverage against potential claims in amounts that are believed to be adequate. The Company believes that it is not presently a party to any other litigation, the outcome of which would have a material adverse effect on its business, financial condition, results of operations or cash flows.

Guarantees

The Company has entered into certain stand-by letters of credit that total $3.5 million at September 30, 2011. The stand-by letters of credit relate to workers’ compensation insurance and equipment financing.

6. Segment Information

The Company’s operations are organized in two reportable segments, the Water Transmission Group and the Tubular Products Group, which are based on the nature of the products and the manufacturing process. The Water Transmission Group manufactures large-diameter, high-pressure steel pipeline systems for use in water infrastructure applications, primarily related to drinking water systems. These products are also used for hydroelectric power systems, wastewater systems and other applications. In addition, the Water Transmission Group makes products for industrial plant piping systems and certain structural applications. The Tubular Products Group manufactures and markets smaller diameter, electric resistance welded steel pipe used in a wide range of applications, including energy, construction, and agricultural systems. The Tubular Products Group also manufactured and marketed welded steel pipe used in traffic signpost applications through June 1, 2011 (see Note 12). These two segments represent distinct business activities, which management evaluates based on segment gross profit and operating income. Transfers between segments in the periods presented were not material.

	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010
	(in thousands)						(in thousands)
Net sales:
Water Transmission	$	76,953		$	59,323		$	210,057		$	168,068
Tubular Products		62,312			53,447			184,467			121,209
Total	$	139,265		$	112,770		$	394,524		$	289,277
Gross profit:
Water Transmission	$	13,345		$	6,880		$	34,770		$	17,627
Tubular Products		3,169			3,601			13,183			5,966
Total	$	16,514		$	10,481		$	47,953		$	23,593
Operating income (loss):
Water Transmission	$	10,747		$	4,521		$	28,150		$	10,772
Tubular Products		2,349			2,529			10,502			3,533
Corporate		(3,049	)		(4,844	)		(10,058	)		(12,783	)
Total	$	10,047		$	2,206		$	28,594		$	1,522

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7. Share-based Compensation

The Company has one active stock incentive plan for employees and directors, the 2007 Stock Incentive Plan, which provides for awards of stock options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted shares of common stock, restricted stock units and performance awards. In addition, the Company has two inactive stock option plans, the 1995 Stock Option Plan for Nonemployee Directors and the Amended 1995 Stock Incentive Plan, under which previously granted options remain outstanding.

The Company recognizes compensation cost as service is rendered based on the fair value of the awards. The following summarizes share-based compensation expense recorded (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2011		2010		2011		2010
Cost of sales	$	4	$	3	$	13	$	38
Selling, general and administrative expenses		67		45	$	506	$	556
Total	$	71	$	48	$	519	$	594

As of September 30, 2011, unrecognized compensation expense related to the unvested portion of the Company’s restricted stock units and performance awards was $176,000, which is expected to be recognized over a weighted average period of 0.7 years.

Stock Option Awards

A summary of the status of the Company’s stock options as of September 30, 2011 and changes during the nine months then ended is presented below:

	Options Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
								(In thousands)
Balance, January 1, 2011		145,209		$	17.64
Options granted		—
Options exercised or exchanged		(73,612	)		14.12
Options canceled		—
Balance, September 30, 2011		71,597			21.26		4.22	$	149
Exercisable, September 30, 2011		71,597			21.26		4.22	$	149

The total intrinsic value, defined as the difference between the current market value and the grant price, of options exercised or exchanged during the nine months ended September 30, 2011 was $758,000.

Restricted Stock Units and Performance Awards

A summary of the status of the Company’s restricted stock units and performance awards as of September 30, 2011 and changes during the nine months then ended is presented below:

	Number of Restricted Stock Units and Performance Awards			Weighted Average Grant Date Fair Value
Unvested restricted stock units and performance awards at January 1, 2011		55,843		$	37.00
Restricted stock units and performance awards granted		18,000			23.79
Restricted stock units and performance awards vested		(8,979	)		27.29
Restricted stock units and performance awards canceled		(21,774	)		46.94
Unvested restricted stock units and performance awards at September 30, 2011		43,090			28.47

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Restricted stock units (RSU’s) and performance stock awards (PSA’s) are measured at market value on the date of grant. RSU’s are service-based awards and generally vest equally over a three-year period. PSA’s are performance and service-based awards. PSA’s are awarded at the end of a three-year performance period, if certain performance objectives are met, and vest equally over a two-year period. The Company recognizes compensation expense related to the performance awards based on the probable outcome of the performance conditions.

Stock Awards

For the nine months ended September 30, 2011 and 2010, stock awards of 6,261 shares and 0 shares, respectively, were granted to non-employee directors, which vested immediately upon issuance. The Company recorded compensation expense based on the fair market value per share of the awards on the grant date of $25.15 in 2011.

8. Income Taxes

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal, state or foreign income tax examinations for years before 2007.

The Company had $125,000 of unrecognized tax benefits at September 30, 2011 and December 31, 2010. The Company does not believe it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the following twelve months; however, actual results could differ from those currently expected.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company provided for income taxes at estimated effective tax rates of 52.1% and 43.6%, respectively, for the three and nine month periods ended September 30, 2011, and estimated effective tax rates of 25.1% and 26.3%, respectively, for the three and nine month periods ended September 30, 2010.

9. Comprehensive Income (Loss)

Comprehensive income includes all changes in stockholders’ equity for the three and nine month periods ended September 30, 2011 and 2010 except those resulting from investments by and distributions to stockholders as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010
Net income (loss)	$	3,284	$	(134	)	$	11,193	$	(2,784	)
Pension liability adjustment, net of tax		44		44			132		132
Unrealized gain (loss) on derivative financial instruments, net of tax		253		(18	)		377		91
Total comprehensive income (loss)	$	3,581	$	(108	)	$	11,702	$	(2,561	)

10. Earnings (Loss) per Share

Earnings (loss) per basic and diluted weighted average common share outstanding was calculated as follows for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010
Net income (loss) (in thousands)	$	3,284	$	(134	)	$	11,193	$	(2,784	)
Basic weighted-average common shares outstanding		9,346,397		9,289,921			9,326,070		9,272,668
Effect of potentially dilutive common shares(1)		26,997		—			33,188		—
Diluted weighted-average common shares outstanding		9,373,394		9,289,921			9,359,258		9,272,668
Earnings (loss) per common share:
Earnings (loss) per basic common share	$	0.35	$	(0.01	)	$	1.20	$	(0.30	)
Earnings (loss) per diluted common share	$	0.35	$	(0.01	)	$	1.20	$	(0.30	)
Antidilutive shares not included in diluted common share calculation		10,000		75,403			16,261		33,049

(1) Represents the effect of the assumed exercise of stock options and the vesting of restricted stock units and performance stock awards, based on the treasury stock method

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11. Recent Accounting and Reporting Developments

In September 2011, the FASB issued ASU 2011-08, which simplified the goodwill impairment test by giving companies the option to perform a qualitative assessment to determine whether the performance of the two step impairment testing is necessary. This guidance is effective for interim and annual periods beginning after December 15, 2011 and early adoption is allowed. The Company plans to early adopt this guidance for its annual impairment test as of December 31, 2011, and does not expect the adoption to have a material impact on its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, which eliminates the option to present components of other comprehensive income as part of the Statement of Stockholders Equity. All changes in components of stockholders’ equity must be presented in (1) a single continuous statement of comprehensive income, which presents the total of comprehensive income, the components of net income, and the components of comprehensive income, or (2) two separate but consecutive statements. Under either presentation method, reclassification adjustments between other comprehensive income and net income are required to be presented on the face of the financial statements. In October 2011, the FASB decided to delay the effective date of the requirement to present reclassifications of other comprehensive income on the face of the income statement. All other guidance in ASU-05 is effective for interim and annual periods beginning after December 15, 2011 and will be applied retrospectively. The adoption of this guidance does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income and thus will have a presentation only impact.

In May 2011, the FASB issued ASU 2011-04, which amends the wording used to describe the requirements for measuring fair value and expands fair value disclosure requirements. This guidance is effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not expected to have a significant impact on the Company’s consolidated financial position, results of operations or cash flows as the new requirements are primarily disclosure related.

12. Sale of Business

On April 1, 2011, the Company sold its interest in NWPA for $0.8 million to the controlling owners of the business. The full amount has been received by the Company at September 30, 2011.

On June 1, 2011, the Company sold all assets of the traffic systems product line of the Tubular Products facility in Houston, Texas. Assets sold as part of this sale included the (i) raw materials, work-in-process, finished goods and related fuel and supplies inventories, (ii) tangible personal property located at the Houston facilities or used by the Company in connection with the traffic business, including machinery, equipment, tooling, operating and maintenance manuals, parts and all other tangible assets used in or related to the traffic business, (iii) receivables, and (iv) other assets. Total consideration of $13.7 million was received, resulting in a gain of $2.9 million recognized in other expense (income) during the second quarter of 2011. The calculation of the gain on sale included a write-off of $1.0 million of goodwill.

13. Subsequent Events

Amended and Restated Credit Agreement

On March 29, 2012 the Company entered into an amendment to the Company’s current Amended and Restated Credit Agreement which is recorded as “Note payable to financial institution” on the balance sheet. A summary of the amendments is as follows:

• Extended the expiration date to April 30, 2013;

• Set aggregate commitments of the lenders at $115 million; and

• Waived compliance with certain covenants and made certain changes in the definition, method of calculation and amounts of certain covenants.

14. Restatement of Previously Issued Financial Statements

Subsequent to the issuance of our unaudited condensed consolidated financial statements for the quarter ended June 30, 2011, the Company determined that there were errors included in the previously issued condensed consolidated financial statements as described below. As a result, we have restated our condensed consolidated financial statements as of December 31, 2010 and for the three and nine months ended September 30, 2010 to correct the errors described below.

The restatement corrects the following errors:

Depreciation

• The Company’s historical method of systematically and rationally allocating equipment depreciation using the units of production depreciation methodology (the “Units of Production Method”) requires an estimate of future tons of production over the remaining useful lives of equipment. The estimates of future tons of production over the remaining useful lives of equipment were not properly re-evaluated subsequent to the initial assumptions utilized in the adoption, in 2006, of the Units of Production Method. To appropriately apply the Units of Production Method, the Company should have periodically re-evaluated the assumptions underlying its application of the Units of Production Method and changed the assumptions underlying the accounting estimate beginning January 1, 2009. The effects of correcting this error are a net increase in depreciation expense and a net decrease in loss on disposal, both of which are included in cost of sales, and a net increase in accumulated depreciation.

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• The Company also corrected its estimate of the remaining lives of non-operating equipment depreciated using the straight-line method of depreciation. The effects of correcting this error are a net decrease in depreciation expense, which is reflected in selling, general and administrative expense.

• Historical salvage value estimates used to systematically and rationally allocate property and equipment depreciation were incorrect as they did not sufficiently consider the estimated disposal value at the end of the property and equipment’s useful life. The effects of correcting this error are an increase in depreciation expense, which is reflected in cost of sales and selling, general and administrative expense, and an increase in accumulated depreciation.

Other Errors

• A contractual arrangement entered into with Lucid Energy LLC (“Lucid Energy”) during 2008 was incorrectly accounted for as notes receivable within Other Assets. The contractual arrangement with Lucid Energy represented an interest in a variable interest entity which should have resulted in the entity being consolidated during 2009 and subsequently deconsolidated following the retrospective adoption of the FASB authoritative guidance which changed the method of identifying the primary beneficiary. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Upon deconsolidation, the Company’s investment in the entity should have been recorded as research and development expense within selling, general and administrative expense. The adjustments required to correct these errors have resulted in an increase in selling, general, and administrative expense, a decrease in interest income, and a decrease in other assets.

• Certain equipment leases historically accounted for as operating leases should have been recorded as capital leases. The correction of this error increases depreciation expense and decreases rental expense, both of which are included in cost of sales, and increases interest expense in each period. The correction of this error also increased property and equipment, net, and capital lease obligations.

• Certain costs capitalized upon the relocation of machinery and equipment to our Bossier City facility in 2008 and 2009 should have been expensed. The effects of correcting these errors were a reduction in machinery and equipment of $2.8 million as of September 30, 2011, and the related tax effects.

• Certain previously identified immaterial errors were corrected as part of the restatement.

The impact on the Company’s previously reported condensed consolidated statement of operations for the three and nine months ended September 30, 2010 are shown in the following tables (in thousands, except per share data):

				Restatement Adjustments
	As  Previously Reported			Depreciation			Other			As Restated
Three Months Ended September 30, 2010
Net sales	$	112,770		$	—		$	—		$	112,770
Cost of sales		101,302			1,147			(160	)		102,289
Gross profit		11,468			(1,147	)		160			10,481
Selling, general and administrative		7,988			2			285			8,275
Operating income		3,480			(1,149	)		(125	)		2,206
Other expense		138			—			—			138
Interest income		(243	)		—			27			(216	)
Interest expense		2,206			—			257			2,463
Income (loss) before income taxes		1,379			(1,149	)		(409	)		(179	)
Provision for (benefit from) income taxes		686			(540	)		(191	)		(45	)
Net income (loss)	$	693		$	(609	)	$	(218	)	$	(134	)
Basic income (loss) per share	$	0.07								$	(0.01	)
Diluted income (loss) per share	$	0.07								$	(0.01	)

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				Restatement Adjustments
	As  Previously Reported			Depreciation			Other			As Restated
Nine Months Ended September 30, 2010
Net sales	$	289,277		$	—		$	—		$	289,277
Cost of sales		262,945			3,151			(412	)		265,684
Gross profit		26,332			(3,151	)		412			23,593
Selling, general and administrative		21,254			(38	)		855			22,071
Operating income		5,078			(3,113	)		(443	)		1,522
Other income		(289	)		—			—			(289	)
Interest income		(709	)		—			66			(643	)
Interest expense		5,482			—			752			6,234
Income (loss) before income taxes		594			(3,113	)		(1,261	)		(3,780	)
Provision for (benefit from) income taxes		242			(914	)		(324	)		(996	)
Net income (loss)	$	352		$	(2,199	)	$	(937	)	$	(2,784	)
Basic income (loss) per share	$	0.04								$	(0.30	)
Diluted income (loss) per share	$	0.04								$	(0.30	)

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The following table presents the impact of the restatement adjustments on the Company’s previously reported consolidated balance sheet at December 31, 2010 (in thousands):

				Restatement Adjustments
	As  Previously Reported			Depreciation			Other			As Restated
As of December 31, 2010
Assets
Current assets:
Cash and cash equivalents	$	51		$	—		$	—		$	51
Trade and other receivables, net		66,474			—			—			66,474
Costs and estimated earnings in excess of billings on uncompleted contracts		45,533			—			—			45,533
Inventories		80,887			—			—			80,887
Refundable income taxes		15,299			—			(200	)		15,099
Deferred income taxes		6,293			—			—			6,293
Prepaid expenses and other		2,163			—			—			2,163
Total current assets		216,700			—			(200	)		216,500
Property and equipment, net		171,766			(24,214	)		6,722			154,274
Goodwill		21,451			—			—			21,451
Other assets		25,288			(243	)		(2,387	)		22,658
Total assets	$	435,205		$	(24,457	)	$	4,135		$	414,883
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	5,714		$	—		$	—		$	5,714
Current portion of capital lease obligations		1,087			—			2,170			3,257
Accounts payable		28,463			—			—			28,463
Accrued liabilities		11,448			—			—			11,448
Billings in excess of costs and estimated earnings on uncompleted contracts		14,808			—			—			14,808
Total current liabilities		61,520			—			2,170			63,690
Note payable to financial institution		68,000			—			—			68,000
Long-term debt, less current portion		17,786			—			—			17,786
Capital lease obligations, less current portion		7,731			—			7,974			15,705
Deferred income taxes		25,694			(9,331	)		(1,781	)		14,582
Pension and other long-term liabilities		8,828			—			—			8,828
Total liabilities		189,559			(9,331	)		8,363			188,591
Stockholders’ equity:
Preferred stock		—			—			—			—
Common stock		93			—			—			93
Additional paid-in-capital		107,578			—			—			107,578
Retained earnings		140,494			(15,126	)		(4,891	)		120,477
Accumulated other comprehensive loss		(2,519	)		—			663			(1,856	)
Total stockholders’ equity		245,646			(15,126	)		(4,228	)		226,292
Total liabilities and stockholders’ equity	$	435,205		$	(24,457	)	$	4,135		$	414,883

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The following tables present the impact of the restatement adjustments on the Company’s previously reported condensed consolidated statement of cash flows for the nine months ended September 30, 2010. Unrealized gain on foreign currency forward contracts in the amount of $0.7 million and equity in earnings of an unconsolidated subsidiary, net of dividends in the amount of $0.2 million have been reclassified within net cash used in operating activities to conform to the current period presentation. In addition, issuance of notes receivable in the amount of $0.5 million and insurance proceeds in the amount of $0.3 million have been reclassified within net cash used in investing activities to conform to current period presentation in the condensed consolidated statements of cash flows. These reclassifications are presented in the Restatement Adjustments column and had no impact on cash flows from operations, income from operations, cash flows from investing activities, net income, or total assets.

	Nine Months Ended September 30, 2010
	As Previously Reported			Restatement Adjustments			As Restated
Cash flows from operating activities:
Net income (loss)	$	352		$	(3,136	)	$	(2,784	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		5,186			5,035			10,221
Amortization of intangible assets		90			66			156
Provision for doubtful accounts		(124	)		—			(124	)
Equity in earnings of unconsolidated subsidiary, net of dividends received		—			192			192
Amortization of debt issuance costs		905			—			905
Deferred income taxes		5,389			(1,238	)		4,151
Loss on disposal of property and equipment		528			(300	)		228
Stock-based compensation expense		594			—			594
Tax benefit from stock option plans		31			—			31
Unrealized gain on foreign currency forward contracts		—			(687	)		(687	)
Changes in operating assets and liabilities:
Trade and other receivables, net		(36,866	)		—			(36,866	)
Costs and estimated earnings in excess of billings on uncompleted contracts, net		(8,482	)		—			(8,482	)
Inventories		(6,419	)		—			(6,419	)
Refundable income taxes		(3,255	)		—			(3,255	)
Prepaid expenses and other		1,620			(4	)		1,616
Accounts payable		3,308			—			3,308
Accrued and other liabilities		1,668			673			2,341
Net cash used in operating activities		(35,475	)		601			(34,874	)
Cash flows from investing activities:
Additions to property and equipment		(15,537	)		—			(15,537	)
Proceeds from sale of property and equipment		18			—			18
Issuance of notes receivable		—			(450	)		(450	)
Insurance proceeds		—			321			321
Other investing activities		(984	)		984			—
Net cash used in investing activities		(16,503	)		855			(15,648	)
Cash flows from financing activities:
Tax witholdings related to net share settlements of restricted share awards and performance shares		(87	)		—			(87	)
Payments on long-term debt		(4,286	)		—			(4,286	)
Borrowings under note payable to financial institutions		159,977			—			159,977
Payments on note payable to financial institutions		(102,867	)		—			(102,867	)
Borrowings from capital lease obligation		2,865			—			2,865
Payments on capital lease obligations		(303	)		(1,456	)		(1,759	)
Payments of debt issuance costs		(3,315	)		—			(3,315	)
Net cash provided by financing activities		51,984			(1,456	)		50,528
Change in cash and cash equivalents		6			—			6
Cash and cash equivalents, beginning of period		31			—			31
Cash and cash equivalents, end of period	$	37		$	—		$	37
Non-cash investing and financing activities:
Escrow account related to capital lease financing	$	2,726			—		$	2,726
Accrued property and equipment purchases		1,725			—			1,725

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Report contain forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995 and Section 21E of the Exchange Act that are based on current expectations, estimates and projections about our business, management’s beliefs, and assumptions made by management. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “forecasts,” “should,” “could”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements as a result of a variety of important factors. While it is impossible to identify all such factors, those that could cause actual results to differ materially from those estimated by us include changes in demand and market prices for our products, product mix, bidding activity, the timing of customer orders and deliveries, production schedules, the price and availability of raw materials, excess or shortage of production capacity, international trade policy and regulations and other risks discussed in our 2011 Form 10-K and from time to time in our other Securities and Exchange Commission filings and reports. Such forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Report. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections with respect thereto or with respect to other forward-looking statements.

Restatement of Previously Issued Financial Statements

Management’s Discussion and Analysis of Financial Condition and Results of Operations in both tabular and textual form as it relates to the three and nine months ended September 30, 2010 has been updated to reflect the effects of the restatement described in Note 14 of the Condensed Consolidated Financial Statements in Part I – Item 1, “Financial Statements”.

Overview

We are a leading North American manufacturer of large-diameter, high-pressure steel pipeline systems for use in water infrastructure applications, primarily related to drinking water systems, and we also manufacture other welded steel pipe products for use in a wide range of applications, including energy, construction, agriculture, and industrial systems. Our pipeline systems are also used for hydroelectric power systems, wastewater systems and other applications, and we also make products for industrial plant piping systems and certain structural applications. These pipeline systems are produced by our Water Transmission Group from seven manufacturing facilities located in Portland, Oregon; Denver, Colorado; Adelanto, California; Parkersburg, West Virginia; Saginaw, Texas; Pleasant Grove, Utah; and Monterrey, Mexico. Our Water Transmission Group accounted for approximately 53.2% of net sales in the first nine months of 2011.

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Our water infrastructure products are generally sold to installation contractors, who include our products in their bids to municipal agencies or privately-owned water companies for specific projects. Within the total pipeline, our products best fit the larger-diameter, higher-pressure applications. We believe our sales are substantially driven by spending on new water infrastructure with additional spending on water infrastructure upgrades, replacements, and repairs. Pricing of our water infrastructure products is largely determined by the competitive environment in each regional market, and the regional markets generally operate independently of each other. We operate our Water Transmission business with a long-term time horizon. Projects are often planned for many years in advance and are sometimes part of fifty-year build out plans. However, in the near-term, we expect strained municipal budgets will impact the Water Transmission Group. Our Tubular Products Group manufactures other welded steel products in three facilities: Atchison, Kansas; Houston, Texas; and Bossier City, Louisiana. We produce a range of products used in several different markets. We currently make pipe for a wide variety of uses, including energy, industrial, construction, and agricultural systems, which are sold to distributors and used in many different applications. Our Tubular Products Group’s sales volume is typically driven by energy spending, non-residential construction spending, and general economic conditions. We believe the greatest potential for significant sales growth in our Tubular Products Group is through our energy products. Our Tubular Products Group generated approximately 46.8% of net sales in the first nine months of 2011.

Purchased steel represents a substantial portion of our cost of sales, and changes in our selling prices often correlate directly to changes in steel costs. This correlation is the greatest in our Tubular Products Group. Tubular Products’ margins are highly sensitive to changes in steel costs, although the amounts of margins are also influenced by the current level of demand in the marketplace.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We evaluate our estimates on an on-going basis, including those related to revenue recognition, allowance for doubtful accounts, depreciation and amortization, goodwill, accrued liabilities, income taxes, and litigation and other contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. A description of our critical accounting policies and related judgments and estimates that affect the preparation of our consolidated financial statements is set forth in our Annual Report on Form 10-K for the year ended December 31, 2011, filed concurrently with this report.

Recent Accounting Pronouncements

See Note 11 of the Condensed Consolidated Financial Statements in Part I – Item I, “Financial Statements” for a description of recent accounting pronouncements, including the dates of adoption and estimated effects on financial position, results of operations and cash flows.

Results of Operations

The following table sets forth, for the period indicated, certain financial information regarding costs and expenses expressed as a percentage of total net sales and net sales of our business segments.

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	Three months ended September 30,						Nine months ended September,
	2011			2010			2011			2010
Net sales
Water Transmission		55.3	%		52.6	%		53.2	%		58.1	%
Tubular Products		44.7			47.4			46.8			41.9
Total net sales		100.0			100.0			100.0			100.0
Cost of sales		88.1			90.7			87.8			91.8
Gross profit		11.9			9.3			12.2			8.2
Selling, general and administrative expense		4.6			7.3			4.9			7.6
Operating income		7.3			2.0			7.3			0.6
Other (income) expense		0.7			0.1			0.3			(0.1	)
Interest income		(0.0	)		(0.2	)		(0.0	)		(0.2	)
Interest expense		1.6			2.2			1.9			2.2
Income (loss) before income taxes		5.0			(0.1	)		5.1			(1.3	)
Provision for (benefit from) income taxes		2.6			(0.0	)		2.2			(0.3	)
Net income (loss)		2.4	%		(0.1	)%		2.9	%		(1.0	)%
Gross profit as a percentage of segment net sales:
Water Transmission		17.3	%		11.6	%		16.6	%		10.5	%
Tubular Products		5.1			6.7			7.1			4.9

Three Months and Nine Months Ended September 30, 2011 Compared to Three Months and Nine Months Ended September 30, 2010

Net sales. Net sales increased 23.5% to $139.3 million for the third quarter of 2011 compared to $112.8 million for the third quarter of 2010, and increased 36.4% to $394.5 million for the first nine months of 2011 compared to $289.3 million in the same period of 2010. One customer in the Water Transmission segment accounted for 10.3% of total net sales in the third quarter of 2011. Two customers, one in the Water Transmission segment and one in the Tubular Products segment, accounted for 11.5% and 11.9%, respectively, of total net sales in the third quarter of 2010.

Water Transmission sales increased by 29.7% to $77.0 million in the third quarter of 2011 from $59.3 million in the third quarter of 2010 and increased 25.0% to $210.0 million in the first nine months of 2011 from $168.1 million in the first nine months of 2010. The increase in sales in the third quarter of 2011 compared to the third quarter of 2010 was due to an 18% increase in average selling price per ton and a 10% increase in tons produced. The increase in sales in the first nine months of 2011 compared to the first nine months of 2010 was due to a 19% increase in average selling price per ton and a 5% increase in tons produced. The increase in average selling price per ton for the third quarter of 2011 and the first nine months of 2011 was driven by the mix of contracts produced in those periods, which include an increase in material cost per ton, as compared to the same periods of 2010. Higher per ton selling prices for contracts generally correspond to higher costs per ton of material, primarily steel.

Tubular Products sales increased 16.6% to $62.3 million in the third quarter of 2011 from $53.4 million in the third quarter of 2010 and increased 52.2% to $184.5 million in the first nine months of 2011 from $121.2 million in the same period of 2010. The sales increase in the third quarter of 2011 as compared to the third quarter of 2010 was due to a 7% increase in tons sold from 48,695 tons to 52,120 tons and a 9% increase in the average selling price per ton. The sales increase in the first nine months of 2011 compared to the same period in 2010 was due to a 35% increase in tons sold from 115,126 tons to 155,348 tons and a 13% increase in the average selling price per ton. For the third quarter and the first nine months of 2011 compared to the same periods of 2010, the most significant increase in tons sold was the result of higher demand for energy pipe, driven by increases in natural gas and oil drilling operations. Increases in energy pipe tons sold were 11% in the third quarter compared to the third quarter last year and 57% for the first nine months of 2011 compared to the same period of 2010. The higher production volume needed to support these increased sales was enabled by our investment in our Bossier City, Louisiana facility in 2010, which increased our energy pipe manufacturing capacity. The increases in average selling prices principally reflect higher steel costs. Cost per ton of material including steel increased by 5% in the third quarter of 2011 compared to the third quarter of 2010 and by 9% in the first nine months of 2011 compared to the same period of 2010.

Gross profit. Gross profit increased 57.6% to $16.5 million (11.9% of total net sales) in the third quarter of 2011 from $10.5 million (9.3% of total net sales) in the third quarter of 2010 and increased 103.2% to $48.0 million (12.2% of total net sales) in the first nine months of 2011 from $23.6 million (8.2% of total net sales) in the first nine months of 2010.

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Water Transmission gross profit increased $6.5 million, or 94.0%, to $13.3 million (17.3% of segment net sales) in the third quarter of 2011 from $6.9 million (11.6% of segment net sales) in the third quarter of 2010. Water Transmission gross profit also increased in the first nine months of 2011 to $34.8 million (16.6% of segment net sales) compared to the same period in the prior year when gross profit was $17.6 million (10.5% of segment net sales). The increases in gross profit in the third quarter of 2011 compared to the same quarter of 2010 and in the first nine months of 2011 compared to the same period of the prior year were driven by the increases in tons produced and the increases in average selling price per ton. The increases in gross profit as a percentage of sales in the third quarter and first nine months of 2011 compared to the same periods in 2010 were driven by a more favorable mix of contracts and by the favorable impact of higher volume on the fixed portion of our cost of goods sold as a percent of sales, partially offset by increased depreciation expense. The more favorable mix of contracts in the third quarter and the first nine months of 2011 is partially the result of the completion of lower margin contracts awarded in 2009, which flowed through the income statement in 2010, and which were replaced by higher margin contracts bid in 2010 and reflected in the 2011 income statement.

Gross profit from Tubular Products decreased $0.4 million, or 12.0%, to $3.2 million (5.1% of segment net sales) in the third quarter of 2011 from $3.6 million (6.7% of segment net sales) in the third quarter of 2010 and increased 121.0% to $13.2 million (7.1% of segment net sales) in the first nine months of 2011 from $6.0 million (4.9% of segment net sales) in the first nine months of 2010. Gross profit and gross profit as a percent of sales in the third quarter of 2011 were negatively impacted by increased customer credits, increased depreciation, sale of our Houston traffic business, and depressed market conditions for structural and standard pipe. The impact of the lower yields was partially offset by a more favorable product mix. Energy pipe, which has a higher gross profit as a percent of sales than other tubular products, represented 71% of tons sold in the third quarter of 2011 compared to 68% in the third quarter of 2010. The increase in gross profit as a percent of sales in the first nine months of 2011 was driven by a more favorable mix, as energy pipe represented 70% of tons sold in the first nine months of 2011 compared to 60% in the same period of 2010. The gross profit as a percent of sales for the first nine months of 2011 also improved relative to the same periods of the prior year due to the favorable impact of higher volume on the fixed portion of our cost of goods sold as a percent of sales.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased to $6.5 million (4.6% of total net sales) in the third quarter of 2011 from $8.3 million (7.3% of total net sales) in the third quarter of 2010 and decreased to $19.4 million (4.9% of total net sales) in the first nine months of 2011 from $22.1 million (7.6% of total net sales) in the same period of 2010. The decrease in the third quarter of 2011 as compared to the third quarter of 2010 was primarily the result of a reduction in expenses of $1.5 million related to our accounting investigation compared to the third quarter of 2010, a $0.5 million reduction in tubular products commission expense as the Tubular Products sales function shifts from external to internal, and a reduction of $0.2 million in professional fees, partially offset by an increase of $0.2 million in bonus and share-based compensation in connection with improved operating results and an increase of $0.2 million in wages and benefits. The decrease in the first nine months of 2011 compared to the same period of the prior year was largely driven by a $0.4 million net credit driven by insurance proceeds received related to our accounting investigation compared to expense of $4.9 million in the first nine months of 2010, partially offset by a $2.2 million increase in bonus and share-based compensation expense due to improved operating results and a $1.0 million increase in wages and benefits due to increased headcount.

Other expense (income). Other expense increased by $0.8 million in the third quarter of 2011 compared to the third quarter of 2010 and increased to $1.3 million of expense in the first nine months of 2011 from income of $0.3 million in the first nine months of 2010. The increase in expense in the third quarter of 2011 is driven by an allowance of $0.9 million taken on notes receivable. The increase in expense in the first nine months of 2011 compared to the same period in 2010 was driven by an allowance of $4.1 million in total taken on notes receivable during the second and third quarters of 2011, partially offset by a $2.9 million gain on the sale of the Houston traffic systems business also recognized in the second quarter of 2011.

Interest expense. Interest expense was $2.2 million in the third quarter of 2011 and $2.5 million in the third quarter of 2010 and $7.4 million in the first nine months of 2011 and $6.2 million in the first nine months of 2010. Lower average borrowings partially offset by higher average interest rates resulted in a decrease in interest expense in the third quarter of 2011 compared to the third quarter of 2010. Average borrowings and average interest rates were both higher in the first nine months of 2011 compared to the same period in 2010, which increased interest expense in the first nine months of 2011 compared to 2010.

Income taxes. The tax provision was $3.6 million in the third quarter of 2011 (an effective tax rate of 52.1%) and $8.6 million in the first nine months of 2011 (an effective tax rate of 43.6%), which exceeds our federal statutory rate of 35% due primarily to state taxes and the relationship of permanent income tax deductions and tax credits to estimated pre-tax income for the year 2011. The tax benefit for the third quarter of 2010 was $45,000 (an effective tax rate of 25.1%) and $1.0 million first the first nine months of 2010 (an effective tax rate of 26.3%). When pre-tax earnings are minimal or move between loss and income positions, such as during 2010, the effective income tax rate can change significantly depending on the relationship of permanent income tax deductions and tax credits to estimated pre-tax income or loss. Accordingly, the comparison of effective rates between periods is not meaningful.

Liquidity and Capital Resources

Sources and Uses of Cash

Our principal sources of liquidity generally include operating cash flow and our bank credit facility. Our principal uses of liquidity generally include capital expenditures, working capital and debt service. Information regarding our cash flows for the nine months ended September 30, 2011 is presented in our condensed consolidated statements of cash flows contained in this Form 10-Q, and is further discussed below.

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As of September 30, 2011, our working capital (current assets minus current liabilities) was $164.6 million as compared to $152.8 million as of December 31, 2010.

Net cash provided by operating activities in the first nine months of 2011 was $9.5 million. This was primarily the result of the collection of $14.7 million of federal income tax refunds, partially offset by an increase in income taxes payable of $6.7 million and fluctuations in our working capital accounts, which result from timing differences between production, shipment and invoicing of our products, as well as changes in levels of production and costs of materials. We typically have a relatively large investment in working capital, as we are generally obligated to pay for goods and services early in the life cycle of a Water Transmission segment project while cash is not received until much later in the project. Our revenues in the Water Transmission segment are recognized on a percentage-of-completion method; therefore, there is little correlation between revenue recognition and cash receipts and the elapsed time can be significant. As such, our payment cycle is a significantly shorter interval than our collection cycle, although the effect of this difference in the cycles may vary from period to period.

Net cash provided by investing activities in the first nine months of 2011 was $3.1 million, primarily from proceeds received from the sale of the traffic systems product line of the Houston facility for $13.7 million, partially offset by capital expenditures for capacity expansion in our Tubular Products plants. Capital expenditures in 2011 are expected to be approximately $16 million to $18 million for standard capital replacement and recently announced strategic investment projects. These strategic investment projects include an expansion at our Atchison, Kansas facility that will increase its production capacity by more than 50%, improve productivity and enable the facility to produce pipe up to 0.375 inch wall. In addition, we have upgraded our Houston, Texas mill to facilitate production of 2-3/8 and 2-7/8 inch tubing with physical properties suitable for heat treating.

Net cash used in financing activities in the first nine months of 2011 was $12.6 million which resulted primarily from payments of $115.1 million on the Company’s Amended and Restated Credit Agreement (“Credit Agreement”) and payments of long term debt of $4.3 million, partially offset by borrowings of $109.1 million on the Company’s Credit Agreement.

We anticipate that our existing cash and cash equivalents, cash flows expected to be generated by operations, and amounts available under our credit agreement will be adequate to fund our working capital and capital requirements for at least the foreseeable future. We also expect to continue to rely on cash generated from operations and other sources of available funds to make required principal payments under our long term debt during 2011. To the extent necessary, we may also satisfy capital requirements through additional bank borrowings, senior notes, term notes, subordinated debt, and capital and operating leases, if such resources are available on satisfactory terms. See the discussion below under “Line of Credit and Long-Term Debt” for a discussion of developments in 2010 regarding compliance with the terms of our line of credit and long-term debt agreements. We have from time to time evaluated and continue to evaluate opportunities for acquisitions and expansion. Any such transactions, if consummated, may use a portion of our working capital or necessitate additional bank borrowings or other sources of funding.

Line of Credit and Long-Term Debt

We had the following significant components of debt at September 30, 2011: a $125.0 million Credit Agreement, under which $62.0 million was outstanding; $6.4 million of Series A Term Note, $4.5 million of Series B Term Notes, $5.7 million of Series C Term Notes and $2.6 million of Series D Term Notes.

The Credit Agreement expires on April 30, 2012, and bears interest at rates related to LIBOR plus 2.50% to 4.50%, or the lending institution’s prime rate, plus 1.50% to 3.50%. Borrowings under the Credit Agreement are collateralized by substantially all of our personal property.

During 2010, we entered into several amendments to our Credit Agreement and our Amended and Restated Note Purchase and Private Shelf Agreement (“Note Purchase Agreement”). The amendments, among other things, reduced the aggregate availability of our Credit Agreement, increased interest rates charged on outstanding balances and waived compliance with certain covenants in the Agreements for the year ended December 31, 2009 through the quarter ended March 31, 2011. Upon delivery of the March 31, 2011 Compliance Certificate, all restrictions were removed and amounts available under our Credit Agreement were increased to $125 million. In addition, the amendments changed the definitions, method of application and amounts of certain covenants. At September 30, 2011, we had $62.0 million outstanding under the Credit Agreement bearing interest at a weighted average rate of 4.45%. At September 30, 2011, we had an additional net borrowing capacity under the credit facility of $59.5 million.

On March 29, 2012, the Company entered into an amendment to the Company’s Credit Agreement which extended the expiration date to April 30, 2013, set aggregate commitments of the lenders at $115 million, waived compliance with certain covenants, and made certain changes in the definition, method of calculation and amounts of certain covenants.

The Series A Term Note in the principal amount of $6.4 million matures on February 25, 2014 and requires annual payments in the amount of $2.1 million plus interest of 10.50% paid quarterly on February 25, May 25, August 25 and November 25. The Series B Term Notes in the principal amount of $4.5 million mature on June 21, 2014 and require annual payments in the amount of $1.5 million plus interest of 10.22% paid quarterly on March 21, June 21, September 21 and December 21. The Series C Term Notes in the principal amount of $5.7 million mature on October 26, 2014 and require annual payments of $1.4 million plus interest of 9.11% paid quarterly on January 26, April 26, July 26 and October 26. The Series D Term Notes in the principal amount of $2.6 million mature on January 24, 2015 and require annual payments in the amount of $643,000 plus interest of 9.07% paid quarterly on January 24, April 24, July 24 and October 24. The Series A Term Note, the Series B Term Notes, the Series C Term Notes, and the Series D Term Notes (together, the “Term Notes”) are collateralized by accounts receivable, inventory and certain equipment.

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We had $16.5 million of capital lease obligations outstanding at September 30, 2011, under which certain equipment used in the manufacturing process is leased. The weighted average interest rate on the capital leases is 7.83%.

The capital leases outstanding as of September 30, 2011 include an agreement entered into as of September 2009 to finance our Bossier City, Louisiana facility (the “Financing Arrangement”). As part of the Financing Arrangement, a $10 million escrow account was provided for the Company by a local government entity through a financial institution and funds are released upon qualifying purchase requisitions. As we purchase equipment for the facility, we enter into a sale-leaseback transaction with the governmental entity as part of the Financing Arrangement. As of September 30, 2011, $2.7 million was held in the escrow account, which is included in other assets, as a result of proceeds from the Financing Arrangement. The Financing Arrangement requires us to meet certain loan covenants, measured at the end of each fiscal quarter. These loan covenants follow the covenants required by our Credit Agreement.

The Credit Agreement, the Note Purchase Agreement and certain of our leases place various restrictions on our ability to, among other things, incur certain additional indebtedness, create liens or other encumbrances on assets, and incur additional capital expenditures. The Credit Agreement, Note Purchase Agreement, and certain of our leases require us to be in compliance with certain financial covenants. The results of our financial covenants as of September 30, 2011 are below.

• The Consolidated Senior Leverage Ratio must not be greater than 4.0:1.0. Our ratio as of September 30, 2011 is 2.04:1.0.

• The Consolidated Total Leverage Ratio must not be greater than 4.0:1.0. Our ratio as of September 30, 2011 is 2.04:1.0.

• The Consolidated Tangible Net Worth must be greater than $199.2 million. Our tangible net worth as of September 30, 2011 is $218.1 million.

• The Asset Coverage Ratio must not be less than 1.0:1.0. Our ratio as of September 30, 2011 is 2.15:1.0.

• The Consolidated Rental and Operating Lease Expense to Consolidated Revenue Ratio must not be greater than 6.0%. Our ratio as of September 30, 2011 is 0.7%.

• The Consolidated Fixed Charge Coverage Ratio must not be less than 1.25:1.0. Our ratio as of September 30, 2011 is 2.13:1.0.

As of September 30, 2011, we are in compliance with all financial covenants.

Based on our business plan and forecasts of operations, we believe we will remain in compliance with our amended covenants for the remainder of the term of our Credit Agreement. We are currently reviewing our future capital requirements, and are considering the amount and type of financing that we will require. We anticipate that we will be able to complete the refinancing prior to expiration of the Credit Agreement.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future material effect on our financial position, results of operations or cash flows.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

For a discussion of the Company’s market risk associated with foreign currencies and interest rates, see Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” in Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, filed concurrently with this report.

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Item 4. Controls and Procedures

Restatement of Previously Issued Financial Statements

In this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 (the “September 2011 Form 10-Q”), Northwest Pipe Company (“the Company”) is restating to reflect the effects of the restatement as of December 31, 2010 and for the three and nine months ended September 30, 2010 in Part I—Item 1, “Financial Statements”. In this filing the Company is also updating Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to reflect the effects of the restatement as it relates to December 31, 2010 and the three and nine months ended September 30, 2010.

For further detail on the financial statement impacts and the adjustments made as a result of the restatement, see Note 14 of the Condensed Consolidated Financial Statements in Part I—Item 1, “Financial Statements.”

Evaluation of Disclosure Controls and Procedures

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

After discovering errors in our consolidated financial statements as of and for the years ended December 31, 2010 and 2009, opening retained earnings at December 31, 2008, and the unaudited condensed consolidated financial statements for each of the quarters in the years then ended and the quarters ended March 31, 2011 and June 30, 2011, that required restatement, our management, with the participation of our CEO and CFO have concluded that errors resulting in the restatement of our consolidated financial statements were the result of previously disclosed and additionally identified material weaknesses in internal controls over financial reporting as described below. As a result of these material weaknesses in internal controls over financial reporting, our CEO and CFO have concluded that, as of September 30, 2011, our disclosure controls and procedures were not effective.

Changes in Internal Control over Financial Reporting

As a component of remediation efforts described in the “Plans for Remediation of Material Weaknesses” section below, there were changes in internal control over financial reporting during the quarter ended September 30, 2011, that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting. These changes include implementing controls and procedures for ensuring the regular validation of management assumptions used in certain of our accounting estimates, including those related to fixed assets.

In addition to implementing changes to our validation and review of management assumptions used in certain other accounting estimates throughout the year, we also completed our assessment of historical estimates of useful lives, units of production, and salvage values of our property and equipment prior to the issuance of our financial statements for the quarter ended September 30, 2011. Our process for evaluating the historical estimates included:

• Surveying plant management at each of our plants as to the appropriate estimated useful lives for the vast majority of our property and equipment. As part of this process, we investigated the difference between our property and equipment records and the results of the survey process and identified asset disposals that had not been reported timely as the survey process also served as a physical inventory of our property and equipment.

• Evaluating historical and projected units of production at each plant to reassess the units of production expected on an annual basis.

• Assessing our estimated salvage values in comparison to historical proceeds recognized on disposal.

• Implemented a new process for completing each of these assessments on an annual basis and designed controls to assess the effectiveness of the process.

As a result of this process, we restated previously issued financial statements as discuss in Note 14 of the Condensed Consolidated Financial Statement is Part I—Item 1, “Financial Statements”. While the design of our new annual procedures and related control activities was completed prior to the issuance of these financial statements, the related controls did not have a sufficient period of time to operate in order for us to assess their operating effectiveness.

In addition, we began implementation of processes to identify and test critical Excel spreadsheets used to support the preparation of the financial statements.

As part of our 2011 assessment of internal control over financial reporting, our management will test and evaluate these additional controls to assess whether they are operating effectively.

As described below under “Plans for Remediation of Material Weaknesses”, we are dedicating significant resources to support our efforts to improve the control environment and to remedy the remaining control weaknesses described herein.

Material Weaknesses in Internal Control over Financial Reporting

In connection with management’s previous assessment of our internal control over financial reporting as of December 31, 2010, management has identified the following deficiencies that constituted individually, or in the aggregate, material weaknesses in our internal control over financial reporting as of December 31, 2010:

• We did not maintain an effective control environment, which is necessary for effective internal control over financial reporting, as evidenced by: (i) an insufficient number of personnel with an appropriate level of generally accepted accounting principles (“GAAP”) knowledge and experience or ongoing training in the application of GAAP commensurate with the Company’s financial reporting requirements, and (ii) insufficient number of personnel appropriately qualified to perform an appropriately detailed review of the accounting for nonroutine transactions, which resulted in prior periods in erroneous or unsupported judgments regarding the proper application of GAAP. This control environment weakness also contributed to the additional material weaknesses described below.

• We did not have effective controls to ensure regular validation of management assumptions used in certain of our accounting estimates.

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• We did not have effective controls over certain spreadsheets. Specifically, the Company did not have sufficient review procedures in place to ensure accurate preparation of spreadsheets used to support the preparation of financial information.

• We did not maintain effective controls to ensure timely internal notification of business transactions and decisions requiring accounting entries. Specifically, our sales and human resources teams and plant personnel did not communicate to our accounting staff all of the information necessary to make accurate accounting determinations for certain property and equipment and accrued liability balances.

In connection with the restatement described in Note 14 of the Condensed Consolidated Financial Statements in Part I—Item 1, “Financial Statements”, we identified the following additional material weakness that existed as of December 31, 2010:

• Control activities related to reviews to periodically assess accounting estimates of useful lives, units of production and salvage values used to systematically and rationally allocate depreciation expense and the existence of our property and equipment were not appropriately designed or operating effectively.

The material weaknesses described above resulted in material misstatements in our annual and interim consolidated financial statements. Because of these material weaknesses, management concluded that each of the control deficiencies above constitutes a material weakness and concluded that we did not maintain effective internal control over financial reporting as of September 30, 2011.

Plans for Remediation of Material Weaknesses

Our Board, the Audit Committee and management are adding resources and developing and implementing new processes, procedures and internal controls to remediate, among other things, the material weaknesses that existed in our internal control over financial reporting, and our disclosure controls and procedures, as of September 30, 2011.

We have developed a remediation plan (the “Remediation Plan”) to address the material weaknesses for each of the affected areas presented above. The Remediation Plan ensures that each area affected by a material control weakness is put through a comprehensive remediation process. The Remediation Plan entails a thorough analysis which includes the following phases:

• Define and assess each control deficiency: ensure a thorough understanding of the “as is” state, process owners, and procedural or technological gaps causing the deficiency;

• Design and evaluate a remediation action for each control deficiency for each affected area: validate or improve the related policy and procedures; evaluate skills of the process owners with regard to the policy and adjust as required. The Remediation Plan will require an assessment of all control failures; we expect that many of the recent improvements will provide an appropriate starting point for the specific action plans;

• Implement specific remediation actions: train process owners, allow time for process adoption and adequate transaction volume for next steps;

• Test and measure the design and effectiveness of the remediation actions; test and provide feedback on the design and operating effectiveness of the controls, and;

• Review and acceptance of completion of the remediation effort by management and the Audit Committee.

• This work is underway for all identified areas.

Additionally, we are evaluating and enhancing our entity level controls as part of our Remediation Plan. The following are steps we have taken in this process:

• In March 2010, our Board of Directors appointed a new CEO;

• In August 2010, we hired a Director of Compliance and Controls to direct our remediation efforts;

• In August 2010, our Board of Directors elected a new, independent director who is our lead director;

• In the third quarter of 2010, we implemented a new sub-certification process with our management group in order to demonstrate a clear commitment to corporate integrity and compliance and a duty to report financial irregularities;

• In the third quarter of 2010, we undertook an effort to enhance existing and adopt new, written policies and procedures; specifically, we have focused on our cost-to-cost percentage-of-completion revenue recognition method to describe more clearly our guiding principles related to the accounting for our Water Transmission segment contracts;

• In December 2010, our employees acknowledged, by way of signature, compliance with and understanding of our Code of Business Conduct and Ethics;

• In January 2011, our Board of Directors appointed a new CFO;

• In the first four months of 2011, the accounting and finance department was reorganized and additional personnel were hired;

• In April 2011, our Board of Directors approved a new officer position and hired a General Counsel;

• In May 2011, our Board of Directors approved a new officer position and hired a Chief Operating Officer;

• In September 2011, our Board of Directors revised the Code of Business Conduct and Ethics and the Code of Ethics for Senior Financial Officers.

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The Remediation Plan is being administered by our Director of Compliance and Controls and involves key leaders from across the organization, including the CEO and CFO. Each specific area of action within the Remediation Plan has been assigned an owner who coordinates the resources required for timely completion of the remediation activities. The Director of Compliance and Controls reports quarterly and as needed to the Audit Committee of our Board of Directors on the progress made toward completion of the Remediation Plan.

We believe the steps taken to date have improved the effectiveness of our internal control over financial reporting; however, we have not completed the corrective processes and procedures identified herein. Accordingly, as we continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses described above, we will perform additional procedures prescribed by management including the use of manual mitigating control procedures and employ any additional tools and resources deemed necessary to ensure that our financial statements are fairly stated in all material respects.

Part II – Other Information

Item 1. Legal Proceedings

Information required by this Item 1 is contained in Note 5 to the Condensed Consolidated Financial Statements, Part I—Item 1, “Financial Statements” of this report, under the caption “Commitments and Contingencies.” The text under such caption is incorporated by reference into this Item 1.

Item 1A. Risk Factors

In addition to the other information set forth in this report, the factors discussed in “Part I—Item 1A—Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed concurrently with this report could materially affect our business, financial condition or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. There are additional risks and uncertainties not currently known to us or that we currently deem to be immaterial, that may also materially adversely affect our business, financial condition, or operating results.

Item 5. Other Information

On September 8, 2011, the Company’s Board of Directors approved and adopted a revised Code of Ethics for Senior Financial Officers (“Code of Ethics”), which applies to the Company’s Chief Executive Officer, Chief Financial Officer, Controller, Assistant Financial Controller and Assistant Operational Controller (each, a “Covered Person”). The new Code of Ethics describes in greater detail the policies of the Company and the obligations of each Covered Person with respect to conflict of interest transactions or arrangements, the protection and use of confidential information, maintenance of the Company’s financial records and the preparation of documents and reports filed by the Company with the Securities and Exchange Commission, compliance with applicable laws and regulations, and prompt internal reporting of violations of the Code. The foregoing summary of the new Code of Ethics is qualified in its entirety by reference to the full text of the new Code of Ethics, a copy of which is attached hereto as Exhibit 14.1 and incorporated herein by reference. The new Code of Ethics is available in the Investor Relations section of the Company’s website at www.nwpipe.com.

Item 6. Exhibits

(a) The exhibits filed as part of this Report are listed below:

Exhibit Number	Description
10.1	Change in Control Agreement between Northwest Pipe Company and Scott Montross dated as of July 6, 2011, filed herewith.
14.1	Code of Ethics for Senior Financial Officers as adopted by the Northwest Pipe Company Board of Directors on September 8, 2011, filed herewith.
31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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Exhibit Number	Description
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Database*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

* Pursuant to Rule 406T of Regulation S-T, the Interactive data Files on Exhibit 101, submitted electronically herewith, are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 or the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: April 27, 2012

NORTHWEST PIPE COMPANY
By:	/s/ RICHARD A. ROMAN
	Richard A. Roman
	President and Chief Executive Officer
By:	/s/ ROBIN GANTT
	Robin Gantt
	Vice President, Chief Financial Officer
	(Principal Financial Officer)

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EX-10.1

Exhibit 10.1

Change in Control Agreement

July 6, 2011

Northwest Pipe Company

5721 SE Columbia Way Suite 200

Vancouver WA 98661

(360) 397-6250

Northwest Pipe Company, an Oregon corporation (the “Company”), considers the establishment and maintenance of a sound and vital management to be essential to protecting and enhancing the best interest of the Company and its shareholders. In this connection, the Company recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management to their assigned duties without distraction in circumstances arising from the possibility of a Change in Control of the Company.

In order to induce you to remain in the employ of the Company, this letter agreement, which has been approved by the Board, sets forth the severance benefits which the Company agrees will be provided to you in the event your employment with the Company is terminated subsequent to a “Change in Control” of the Company under the circumstances described below.

1. Right to Terminate. The Company or you may terminate your employment at any time, subject to the Company’s obligations to provide the benefits hereinafter specified in accordance with the terms hereof.

2. Term of Agreement. This Agreement shall commence on the date hereof and shall continue in effect until July 19, 2012; provided, however, that commencing on July 19, 2012 and each July 19 thereafter, the term of this Agreement shall automatically be extended for one additional year unless at least 90 days prior to such July 19, 2012 date, the Company or you shall have given notice that this Agreement shall not be extended; provided, however, that this Agreement shall continue in effect for a period of twenty-four (24) months beyond the term provided herein if a Change in Control, as defined in Section 3 hereto shall have occurred during such term. Notwithstanding anything in this Section 2 to the contrary, this Agreement shall terminate if you or the Company terminate your employment prior to a Change in Control as defined in Section 3 hereof.

3. Change in Control; Person.

3.1 For purposes of this Agreement, a “Change in Control” shall mean the occurrence of any of the following events:

3.1.1 The approval by the shareholders of the Company of:

(a) any consolidation, merger or plan of share exchange involving the Company (a “Merger”) in which the Company is not the continuing or surviving corporation or pursuant to which shares of Common Stock of the Company (“Company Shares”) would be converted into cash, securities or other property, other than a Merger involving Company Shares in which the holders of Company Shares immediately prior to the Merger have the same proportionate ownership of common stock of the surviving corporation immediately after the Merger,

(b) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company; or

(c) the adoption of any plan or proposal for the liquidation or dissolution of the Company.

3.1.2 At any time during a period of two consecutive years, individuals who at the beginning of such period constituted the Board (“Incumbent Directors”) shall cease for any reason to constitute at least a majority thereof unless each new director elected during such two-year period was nominated or elected by two-thirds of the Incumbent Directors then in office and voting (with new directors nominated or elected by two-thirds of the Incumbent Directors also being deemed to be Incumbent Directors); or

3.1.3 Any Person (as hereinafter defined) shall, as a result of a tender or exchange offer, open market purchases, or privately negotiated purchases from anyone other than the Company, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Company ordinarily having the right to vote for the election of directors (“Voting Securities”) representing thirty percent (30%) or more of the combined voting power of the then outstanding Voting Securities.

Notwithstanding anything in the foregoing to the contrary, unless otherwise determined by the Board, no Change in Control shall be deemed to have occurred for purposes of this Agreement if (1) you acquire (other than on the same basis as all other holders of the Company Shares) an equity interest in an entity that acquires the Company in a Change in Control otherwise described under subparagraph 3.1.1 above, or (2) you are part of a group that constitutes a Person which becomes a beneficial owner of Voting Securities in a transaction that otherwise would have resulted in a Change in Control under subparagraph 3.1.3 above.

3.2 For purposes of this Agreement, the term “Person” shall mean and include any individual, corporation, partnership, group, association or other “person,” as such term is used in Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than the Company or any employee benefit plan(s) sponsored by the Company.

4. Termination Following Change In Control. If a Change in Control shall have occurred, you shall be entitled to the benefits provided in Section 5.3 hereof upon the termination of your employment within twenty-four (24) months after such Change in Control unless such termination is (a) because of your death, (b) by the Company for Cause or Disability or (c) by you other than for Good Reason (as all such capitalized terms are hereinafter defined).

4.1 Disability. Termination by the Company of your employment based on “Disability” shall mean termination because of your absence from your duties with the Company on a full-time basis for one hundred eighty (180) consecutive days as a result of your incapacity due to physical or mental illness, unless within thirty (30) days after Notice of Termination (as hereinafter defined) is given to you following such absence you shall have returned to the full-time performance of your duties.

4.2 Cause. Termination by the Company of your employment for “Cause” shall mean termination upon (a) the willful and continued failure by you to substantially perform your reasonably assigned duties with the Company consistent with those duties assigned to you prior to the Change in Control (other than any such failure resulting from your incapacity due to physical or mental illness) which failure shall not have been corrected within thirty (30) days after a demand for substantial performance is delivered to you by the Chairman of the Board or President of the Company which specifically identifies the manner in which such executive believes that you have not substantially performed your duties, or (b) the willful engaging by you in illegal conduct which is materially and demonstrably injurious to the Company. For purposes of this paragraph 4.2, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you in knowing bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the corporation. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of the conduct set forth above in (a) or (b) of this paragraph 4.2 and specifying the particulars thereof in detail.

4.3 Good Reason. Termination by you of your employment for “Good Reason” shall mean termination based on:

4.3.1 a change in your status, title, position(s) or responsibilities as an officer of the Company which, in your judgment (which shall be exercised in good faith), constitutes an adverse change from your status, title, position(s) and responsibilities as in effect immediately prior to the Change in Control, or the assignment to you of any duties or responsibilities which, in your judgment (which shall be exercised in good faith), are inconsistent with such status, title or position(s), or any removal of you from or any failure to reappoint or reelect you to such position(s), except in connection with the termination of your employment for Cause, Disability or as a result of your death or by you other than for Good Reason;

4.3.2 a reduction by the Company in your base salary as in effect immediately prior to the Change in Control;

4.3.3 the failure by the Company to continue in effect any Plan (as hereinafter defined) in which you are participating at the time of the Change in Control (or Plans providing you with at least substantially similar benefits) other than as a result of the normal expiration of any such Plan in accordance with its terms as in effect at the time of the Change in Control, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any of such Plans on at least as favorable a basis to you as is the case on the date of the Change in Control or which would materially reduce your benefits in the future under any of such Plans or deprive you of any material benefit enjoyed by you at the time of the Change in Control;

4.3.4 the failure by the Company to provide and credit you with the number of paid vacation days to which you are then entitled in accordance with the Company’s normal vacation policy as in effect immediately prior to the Change in Control;

4.3.5 the Company’s requiring you to be based anywhere other than within ten (10) miles of where your office is located immediately prior to the Change in Control except for required travel on the Company’s business to an extent substantially consistent with the business travel obligations which you undertook on behalf of the Company prior to the Change in Control;

4.3.6 the failure by the Company to obtain from any Successor (as hereinafter defined) the assumption or assent to this Agreement contemplated by Section 6 hereof within thirty (30) days after a Change in Control; or

4.3.7 any purported termination by the Company of your employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph 4.4 below (and, if applicable, paragraph 4.2 above); and for purposes of this Agreement no such purported termination shall be effective.

For purpose of this Agreement, “Plan” shall mean any compensation plan such as an incentive, stock option or restricted stock plan or any employee benefit plan such as a thrift, pension, profit sharing, medical, disability, accident, life insurance, or relocation plan or policy or any other plan, program or policy of the Company intended to benefit employees.

4.4 Notice of Termination. Any purported termination by the Company or by you following a Change in Control shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of your employment under the provision so indicated.

4.5 Date of Termination. “Date of Termination” shall mean (a) if your employment is to be terminated for Disability, thirty (30) days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such thirty (30) day period), (b) if your employment is to be terminated by the Company for Cause, the date on which a Notice of Termination is given, and (c) if your employment is to be terminated by you or by the Company for any other reason, the date specified in the Notice of Termination, which shall be a date no earlier than ninety (90) days after the date on which a Notice of Termination is given, unless an earlier date has been agreed to by the party receiving the Notice of Termination either in advance of, or after, receiving such Notice of Termination. Notwithstanding anything in the foregoing to the contrary, if the party receiving the Notice of Termination has not previously agreed to the termination, then within thirty (30) days after any Notice of Termination is given, the party receiving such Notice of Termination may notify the other party that a dispute exists concerning the termination, in which event the Date of Termination shall be the date set either by mutual written agreement of the parties or by the arbitrators in a proceeding as provided in Section 12 hereof.

5. Compensation Upon Termination or During Disability.

5.1 During any period following a Change in Control that you fail to perform your duties as a result of incapacity due to physical or mental illness, you shall continue to receive your full base salary at the rate then in effect and any benefits or awards under any Plans shall continue to accrue during such period, to the extent not inconsistent with such Plans, until your employment is terminated pursuant to and in accordance with paragraphs 4.1, 4.4 and 4.5 hereof. Thereafter, your benefits shall be determined in accordance with the Plans then in effect.

5.2 If your employment shall be terminated for Cause or as a result of your death following a Change in Control of the Company, the Company shall pay you your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both the cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you. Thereupon the Company shall have no further obligations to you under this Agreement.

5.3 If within twenty-four (24) months after a Change in Control shall have occurred, as defined in Section 3 above, your employment by the Company shall be terminated (a) by the Company other than for Cause or Disability or (b) by you for Good Reason, then, by no later than the fifth day following the Date of Termination (except as otherwise provided), you shall be entitled to, and shall be paid, without regard to any contrary provisions of any Plan, a severance benefit (the “Severance Benefit”) equal to either (x) the Specified Benefits (as defined in subsection 5.3.1 below), or (y) the Capped Benefit (as defined in subsection 5.3.2 below). You shall be entitled, in your sole discretion, to elect to receive either the Specified Benefits or the Capped Benefit.

5.3.1 The “Specified Benefits” are as follows:

(a) the Company shall pay your full base salary through the Date of Termination at the rate in effect just prior to the time a Notice of Termination is given plus any benefits or awards (including both cash and stock components) which pursuant to the terms of any Plans have been earned or become payable, but which have not yet been paid to you (including amounts which previously had been deferred at your request);

(b) as severance pay and in lieu of any further salary for periods subsequent to the Date of Termination, the Company shall pay to you in a single payment an amount in cash equal to (i) an amount equal to two (2) times the higher of (A) your annual base salary at the rate in effect just prior to the time a Notice of Termination is given, or (B) your annual base salary in effect immediately prior to the Change in Control of the Company, plus (ii) an amount equal to two (2) times the average of the cash bonuses paid to you during the previous three years;

(c) for a twenty-four (24) month period after the Date of Termination, the Company shall arrange to provide you and your dependents with life, accident, medical and dental insurance benefits substantially similar to those which you were receiving immediately prior to the Change in Control of the Company. Notwithstanding the foregoing, the Company shall not provide any benefit otherwise receivable by you pursuant to this paragraph 5.3.1(c) to the extent that a similar benefit is actually received by you from a subsequent employer during such twenty-four (24) month period, and any such benefit actually received by you shall be reported to the Company;

(d) any and all outstanding options to purchase stock of the Company (or any Successor) held by you shall immediately vest and become exercisable in full; and

(e) the Company shall pay you for any vacation time earned but not taken at the Date of Termination, at an hourly rate equal to your annual base salary as in effect immediately prior to the time a Notice of Termination is given divided by 2080.

5.3.2 The “Capped Benefit” equals the Specified Benefits, reduced by the minimum amount necessary to prevent any portion of the Specified Benefits from being a “parachute payment” as defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (“IRC”), or any successor provision. The amount of the Capped Benefit shall therefore equal (1) three times the “base amount” as defined in IRC, Section 280G(b)(3)(A) reduced by $1 (One Dollar), and further reduced by (2) the present value of all other payments and benefits you are entitled to receive from the Company that are contingent upon a Change in Control of the Company within the meaning of IRC Section 280G(b)(2)(A)(i), including accelerated vesting of options and other awards under the Company’s stock option plans, and increased by (3) all Specified Benefits that are not contingent upon a Change in Control within the meaning of IRC Section 280G(b)(2)(A)(i). If you receive the Capped Benefit, you may determine the extent to which each of the Specified Benefits shall be reduced. The parties recognize that there is some uncertainty regarding the computations under IRC Section 280G which must be applied to determine the Capped Benefit. Accordingly, the parties agree that, after the Severance Benefit is paid, the amount of the Capped Benefit may be retroactively adjusted to the extent any subsequent Internal Revenue Service regulations, rulings, audits or other pronouncements establish that the original calculation of the Capped Benefit was incorrect. In that case, amounts shall be paid or reimbursed between the parties so that you will have received the Severance Benefit you would have received if the Capped Benefit had originally been calculated correctly.

5.4 Except as specifically provided above, the amount of any payment provided for in this Section 5 shall not be reduced, offset or subject to recovery by the Company by reason of any compensation earned by you as the result of employment by another employer after the Date of Termination, or otherwise. Your entitlements under Section 5.3 are in addition to, and not in lieu of any rights, benefits or entitlements you may have under the terms or provisions of any Plan.

6. Successors; Binding Agreement.

6.1 The Company will seek to have any Successor (as hereinafter defined), by agreement in form and substance satisfactory to you, assume the Company’s obligations under this Agreement or assent to the fulfillment by the Company of its obligations under this Agreement. Failure of the Company to obtain such assumption or assent prior to or at the time a Person becomes a Successor shall constitute Good Reason for termination by you of your employment and, if a Change in Control of the Company has occurred, shall entitle you immediately to the benefits provided in Section 5.3 hereof upon delivery by you of a Notice of Termination which the Company, by executing this Agreement, hereby assents to. This Agreement will be binding upon and inure to the benefit of the Company and any Successor (and such Successor shall thereafter be deemed the “Company” for purposes of this Agreement), but will not otherwise be assignable, transferable or delegable by the Company. For purposes of this Agreement, “Successor” shall mean any Person that succeeds to, or has the practical ability to control (either immediately or with the passage of time), the Company’s business directly, by merger, consolidation or purchase of assets, or indirectly, by purchase of the Company’s Voting Securities or otherwise.

6.2 This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder if you had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there be no such designee, to your estate.

7. Fees and Expenses. The Company shall pay all legal fees and related legal expenses incurred by you as a result of (i) your termination following a Change in Control of the Company (including all such fees and expenses, if any, incurred in contesting or disputing any such termination) or (ii) your seeking to obtain or enforce any right or benefit provided by this Agreement.

8. Survival. The respective obligations of, and benefits afforded to, the Company and you as provided in Section 5, 6, 7 and 12 of this Agreement shall survive termination of this Agreement.

9. Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid and addressed to the address of the respective party set forth on the first page of this Agreement, provided that all notices to the Company shall be directed to the attention of the Chairman of the Board or President of the Company, with a copy to the Secretary of the Company, or to such other address as either party may have furnished to the other in writing. In accordance herewith, except that notice of change of address shall be effective only upon receipt.

10. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in a writing signed by you and the Chairman of the Board or President of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Oregon.

11. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

12. Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Portland, Oregon by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement. The Company shall bear all costs and expenses arising in connection with any arbitration proceeding pursuant to this Section 12.

13. Related Agreements. To the extent that any provision of any other agreement between the Company or any of its subsidiaries and you shall limit, qualify or be inconsistent with any provision of this Agreement, then for purposes of this Agreement, while the same shall remain in force, the provision of this Agreement shall control and such provision of such other agreement shall be deemed to have been superseded, and to be of no force or effect, as if such other agreement had been formally amended to the extent necessary to accomplish such purpose.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

If this letter correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter which will then constitute our agreement on this subject.

Sincerely,

Richard A. Roman

President and Chief Executive Officer

AGREED AND ACCEPTED:

Scott Montross

Executive Vice President and Chief Operating Officer

EX-14.1

Exhibit 14.1

Code of Ethics for Senior Financial Officers

(As appended to the Code of Business Conduct and Ethics of Northwest Pipe Company)

This Code of Ethics (the “Code of Ethics”) applies to all senior financial officers of Northwest Pipe Company (“Covered Persons”). The senior financial officers of the Company include the Chief Executive Officer, the Chief Financial Officer, the Controller, the Assistant Financial Controller and the Assistant Operational Controller.

The Audit Committee shall determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of violations of this Code of Ethics by the Chief Executive Officer or Chief Financial Officer. Any other violation of this Code of Ethics may result in disciplinary action up to and including termination for cause, and, if warranted, legal proceedings, as determined by the Chief Executive Officer. In determining what action is appropriate in a particular case, the Board of Directors or the Chief Executive Officer shall take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.

This Code of Ethics is required by the United States securities laws and the rules and regulations of the Securities and Exchange Commission as being necessary to deter wrongdoing and to promote:

i. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

ii. Full, fair, accurate, timely, and understandable disclosure in reports and documents that a company files with, or submits to, the Commission and in other public communications made by the company.

iii. Compliance with applicable governmental laws, rules and regulations.

iv. The prompt internal reporting of violations of this Code of Ethics to an appropriate person or persons identified herein.

As noted above, the Company is required to monitor and audit the effectiveness of this Code. If you have any questions regarding this Code, please refer to your immediate supervisor, or with more difficult questions, please feel free to contact the Chief Financial Officer or the General Counsel. You are entitled, of course, to bring any matter to the Company’s Audit Committee in accordance with the procedures set forth in the Company’s Code of Business Conduct and Ethics.

1. Each Covered Person must avoid any transaction or arrangement that would create a conflict of interest or the appearance of a conflict of interest between personal and professional relationships.

A conflict of interest may be generally defined as a conflict between the Covered Person’s private interests and his or her responsibilities to the Company or an entity with which the Company maintains a relationship. A conflict of interest can also arise when an immediate family member is involved in a transaction or arrangement that in any way casts doubt upon the Covered Person’s independence. An “immediate family member” includes a Covered Person’s spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than employees) who shares the Covered Person’s home.

2. Covered Persons may only accept items of nominal value as gifts from the Company or any individual or entity that is involved or seeks to become involved in a business relationship with the Company.

Gifts to Covered Persons must be inexpensive, unsolicited and not given with the objective of influencing the Covered Person’s judgment. It is acceptable for a Covered Person to accept meals or other customary forms of entertainment from individuals or entities that are involved or seek to become involved in a business relationship with the Company as long as these items are not provided in order to influence the Covered Person’s business judgment or decision. Under no circumstances is a Covered Person permitted to accept payments, loans, kickbacks, bribes, special privileges or services from anyone. All gifts that exceed, or might be expected to exceed $250.00 in value must be promptly reported to the Company’s Chief Executive Officer to determine whether the gift is appropriate. If there are any questions or borderline cases, Covered Persons should discuss them with the General Counsel.

3. All Covered Persons are responsible for maintaining accurate financial records for the Company.

Covered Persons must closely adhere to the following accounting guidelines:

i. All assets, liabilities and transactions of the Company should be accurately recorded in accordance with the Company’s record keeping procedures and generally accepted accounting principles;

ii. No false or misleading entries are permitted to be knowingly made or caused to be made in the Company’s record (including expense reports), even if such entries would not be material to the Company or its operations as a whole; and

iii. Any entries that are inaccurate, false or irregular should be promptly reported to the Chairman of the Audit committee for an immediate corrective action.

4. Covered Persons must recognize that confidential information is an asset of the Company, and must refrain from using inside information to their personal advantage.

Covered Persons must maintain the confidentiality of information entrusted to them by the Company or its customers or suppliers, except when disclosure is authorized or legally mandated. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers or suppliers, if disclosed.

At its core, the prohibition against insider trading focuses on the buying, selling or trading in securities using non-public information. The prohibition applies to securities of the Company as well as to customers and suppliers of the Company, or any entity with which the Company has a business relationship. Covered Persons should refer to the Company’s insider trading policy for further guidance.

Covered Persons are in a unique position to acquire non-public information about the Company, and such information might influence their decision to buy, sell or trade securities. In addition to refraining from using inside information in making their own investment decisions, Covered persons should also avoid discussing the inside information with friends or immediate family members (whether at home or in the public) or mailing or faxing the inside information to outside sources unless appropriate confidentiality agreements are in place to ensure that material, non-public information is not used improperly.

5. The conduct of Covered Persons should be governed by the highest standards of integrity and fairness. Covered Persons should avoid those situations in which outside personal interests conflict with the Company’s business. These situations include:

i. Ownership by a Covered Person, or a member of his or her immediate family, of a material financial interest in any outside enterprise that is involved or seeks to become involved in a business relationship with the Company;

ii. Ownership by a Covered Person, or a member of his or her immediate family, of a material financial interest in any outside enterprise that competes for business with the Company; and

iii. Outside employment of a Covered Person, or a member of his or her immediate family, whether as a consultant, director, officer, employee or independent contractor, with an entity that is involved or seeks to become involved in a business relationship with the Company.

6. Covered Persons must not (a) take personal advantage of a situation or knowledge acquired through the use of his or her position or the Company’s property, if the situation or knowledge could be used for the Company’s benefit, (b) use his or her position or Company property or information for personal gain, or (c) compete with the Company. Covered Persons owe a duty to the Company to advance its interests whenever the opportunity arises.

7. In drafting periodic reports that are to be filed with the Securities and Exchange Commission, Covered Persons should take all steps necessary to ensure full, fair, accurate, timely and complete disclosure.

i. Make Sure All Relationships that Could Give Rise to Any Perceived Conflicts are Fully Disclosed. Given the recent focus of lawmakers on a more complete disclosure of any material conflict of interest to the public, it is important to ensure that any transaction that threatens to create the appearance of a conflict of interest is fully disclosed in the Company’s periodic reports.

ii. Use of MD&A Section to Paint a Complete Picture of the Company’s Financial Condition and Results of Operations. A well-written MD&A analysis should be used in order to explain fully all of the key factors, risks and assumptions that support the Company’s business model. While the analysis is far from being an exact science, the MD&A analysis should be used to fully and accurately apprise the investors of the Company’s financial condition and results of operations. Seek Guidance from the Audit Committee. With an increased emphasis on a better conformity with accounting standards, Covered Persons should understand the needs of the Audit Committee, and understand the means of contacting the Audit Committee directly, to ensure that accounting standards are being applied uniformly and that the Company’s disclosure is supported by sound judgment and analysis.

iii. Provide Management with Ample Time to Review and Comment on Disclosure Documents. In an effort to meet periodic reporting deadlines, the Company’s management should be provided with an adequate opportunity to review each disclosure document and to assess its completeness and accuracy. Covered Persons should focus on completing the financial disclosure in periodic reports well ahead of the timing deadlines to allow more time for review by management and auditors.

8. Covered Persons must comply with all laws and regulations that apply to the Company’s business.

All Covered Persons should understand those laws that apply to them in the performance of their duties and ensure that their decisions and actions are conducted in conformity with those laws. Any violation of the applicable laws can subject the Company or the implicated Covered Person to liability. Any inquiries relating to compliance with applicable laws and regulations should be directed to the Company’s General Counsel.

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard A. Roman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Northwest Pipe Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 27, 2012	By:	/s/ RICHARD A. ROMAN
		Richard A. Roman President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robin Gantt, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Northwest Pipe Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 27, 2012	By:	/s/ ROBIN GANTT
		Robin Gantt Vice President, Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Northwest Pipe Company (the “Company”) on Form 10-Q for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard A. Roman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ RICHARD A. ROMAN

Richard A. Roman

President and Chief Executive Officer

April 27, 2012

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Northwest Pipe Company (the “Company”) on Form 10-Q for the period ended September 30, 2011 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Robin Gantt, Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ ROBIN GANTT

Robin Gantt

Vice President, Chief Financial Officer

April 27, 2012

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Derivative Instruments And Hedging Activities

9 Months Ended

Sep. 30, 2011

Derivative Instruments And Hedging Activities [Abstract]

Derivative Instruments And Hedging Activities

4. Derivative Instruments and Hedging Activities

The Company conducts business in various foreign countries and, from time to time, settles transactions in foreign currencies. The Company has established a program that utilizes foreign currency forward contracts to offset the risk associated with the effects of certain foreign currency exposures, typically arising from sales contracts denominated in Canadian currency. These derivative contracts are consistent with the Company's strategy for financial risk management. The Company uses cash flow hedge accounting treatment for qualifying foreign currency forward contracts. The Company initially reports any gain or loss on the effective portion of a cash flow hedge as a component of other comprehensive income and subsequently reclassifies any gain or loss to net sales when the underlying hedged revenue is recorded. Instruments that do not qualify for cash flow hedge accounting treatment are re-measured at fair value on each balance sheet date and resulting gains and losses are recognized in net income. As of September 30, 2011 and December 31, 2010, the total notional amount of the derivative contracts not designated as hedges was $2.6 million (CAD$2.7 million) and $1.3 million (CAD$1.3 million), respectively. As of September 30, 2011 and December 31, 2010, the total notional amount of the derivative contracts designated as hedges was $15.3 million (CAD$16.0 million) and $15.1 million (CAD$15.0 million), respectively.

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

There were no Canadian forward contracts with maturities longer than 12 months at September 30, 2011.

The balance sheet location and the fair values of derivative instruments are (in thousands):

Foreign Currency Forward Contracts	September 30, 2011		December 31, 2010
Assets
Derivatives designated as hedging instruments
Prepaid expenses and other	$	272	$	—
Derivatives not designated as hedging instruments
Prepaid expenses and other		533		—
Total assets	$	805	$	—
Liabilities
Derivatives designated as hedging instruments
Accrued liabilities	$	—	$	317
Derivatives not designated as hedging instruments
Accrued liabilities		48		305
Total liabilities	$	48	$	622

The amounts of the gains and losses related to the Company's derivative contracts designated as hedging instruments for the three and nine months ended September 30, 2011 and September 30, 2010 are (in thousands):

			Pretax Gain (Loss) Recognized in Comprehensive Income on Effective Portion of Derivative
			Three months ended September 30,						Nine months ended September 30,
			2011			2010			2011			2010
Derivatives in Cash Flow Hedging Relationships
Foreign currency forward contracts			$	357		$	(24	)	$	4		$	134
			Pretax Gain (Loss) Recognized in Income on Effective Portion of Derivative as a Result of Reclassification from Accumulated Other Comprehensive Loss
			Three months ended September 30,						Nine months ended September 30,
	Location		2011			2010			2011			2010
Derivatives in Cash Flow Hedging Relationships
Foreign currency forward contracts		Net sales	$	(52	)	$	5		$	(558	)	$	(8	)
			Loss on Ineffective Portion of Derivative and Amount Excluded from Effectiveness Testing Recognized in Income
			Three months ended September 30,						Nine months ended September 30,
	Location		2011			2010			2011			2010
Derivatives in Cash Flow Hedging Relationships
Foreign currency forward contracts		Net sales	$	(15	)	$	(27	)	$	(72	)	$	(29	)

At September 30, 2011, there are $291,000 of deferred pretax gains on outstanding derivatives accumulated in other comprehensive loss, a majority of which is expected to be reclassified to net sales within the next 12 months as a result of underlying hedged transactions also being recorded in net sales.

For the three and nine months ended September 30, 2011, gains from our derivative contracts not designated as hedging instruments recognized in net sales were $0.9 million and $0.3 million, respectively. For the three and nine months ended September 30, 2010, losses from our derivative contracts not designated as hedging instruments recognized in net sales were $0.3 million and $0.4 million, respectively.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

3. Fair Value Measurements

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

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

The following table summarizes information regarding the Company's financial assets and financial liabilities that are measured at fair value on a recurring basis (in thousands):

Description	Balance at September 30, 2011			Level 1		Level 2			Level 3
Financial Assets
Escrow account	$	2,726		$	2,726	$	—		$	—
Deferred compensation plan assets		4,531			4,531		—			—
Derivatives		805			—		805			—
Total Assets	$	8,062		$	7,257	$	805		$	—
Financial Liabilities
Derivatives	$	(48	)	$	—	$	(48	)	$	—
Description	Balance at December 31, 2010			Level 1		Level 2			Level 3
Financial Assets
Escrow account	$	2,726		$	2,726	$	—		$	—
Deferred compensation plan assets		4,560			4,560		—			—
Total Assets	$	7,286		$	7,286	$	—		$	—
Financial Liabilities
Derivatives	$	(622	)	$	—	$	(622	)	$	—

The escrow account, consisting of a money market mutual fund, is valued using quoted market prices in active markets classified as Level 1 within the fair value hierarchy. The deferred compensation plan assets consists of cash and several publicly traded stock and bond mutual funds, valued using quoted market prices in active markets classified as Level 1 within the fair value hierarchy. The Company's derivatives consist of foreign currency cash flow hedges and are valued using various pricing models or discounted cash flow analyses that incorporate observable market parameters, such as interest rate yield curves and currency rates, and are classified as Level 2 within the valuation hierarchy. Derivative valuations incorporate credit risk adjustments that are necessary to reflect the probability of default by the counterparty or the Company.

The net carrying amounts of cash and cash equivalents, trade and other receivables, refundable income taxes, accounts payable, accrued liabilities and note payable to financial institution approximate fair value due to the short-term nature of these instruments. Similarly, the Company believes the carrying value of its long-term debt also approximates fair value in that the interest rates and scheduled maturities applicable of the outstanding borrowings approximate interest rates and terms available for the same or similar loans.

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

We measure our financial assets, including loans receivable and non-marketable equity method investments, at fair value on a non-recurring basis when they are determined to be other-than-temporarily impaired. The fair value of these assets is determined using Level 3 unobservable inputs due to the absence of observable market inputs and the valuations requiring management judgment. During the three and nine months ended September 30, 2011, we recognized $0.9 million and $4.1 million, respectively, of impairment charges on loans receivable. There were no impairment charges taken during the three and nine months ended September 30, 2010. The impairment charges were included in other expense (income) in the consolidated statement of income. All loans receivable are categorized as Level 3 in the fair value hierarchy.

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2011	Dec. 31, 2010
Assets
Cash and cash equivalents	$ 72	$ 51
Trade and other receivables, less allowance for doubtful accounts of $2,118 and $2,151	85,181	66,474
Costs and estimated earnings in excess of billings on uncompleted contracts	47,621	45,533
Inventories	91,889	80,887
Refundable income taxes		15,099
Deferred income taxes	7,481	6,293
Prepaid expenses and other	2,099	2,163
Total current assets	234,343	216,500
Property and equipment, net	152,156	154,274
Goodwill	20,478	21,451
Other assets	15,565	22,658
Total assets	422,542	414,883
Liabilities and Stockholders' Equity
Current portion of long-term debt	5,714	5,714
Current portion of capital lease obligations	3,388	3,257
Accounts payable	27,996	28,463
Accrued liabilities	21,533	11,448
Billings in excess of costs and estimated earnings on uncompleted contracts	11,095	14,808
Total current liabilities	69,726	63,690
Note payable to financial institution	62,000	68,000
Long-term debt, less current portion	13,500	17,786
Capital lease obligations, less current portion	13,156	15,705
Deferred income taxes	16,811	14,582
Other long-term liabilities	8,739	8,828
Total liabilities	183,932	188,591
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued or outstanding
Common stock, $.01 par value, 15,000,000 shares authorized, 9,348,701 and 9,298,156 shares issued and outstanding	94	93
Additional paid-in-capital	108,193	107,578
Retained earnings	131,670	120,477
Accumulated other comprehensive loss	(1,347)	(1,856)
Total stockholders' equity	238,610	226,292
Total liabilities and stockholders' equity	$ 422,542	$ 414,883

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Basis Of Presentation

9 Months Ended

Sep. 30, 2011

Basis Of Presentation [Abstract]

Basis Of Presentation

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The Company is filing this September 2011 Form 10-Q concurrently with the filing of the Annual Report on Form 10-K for the year ended December 31, 2011 (the "2011 Form 10-K"). The financial information as of December 31, 2010 is derived from the audited consolidated financial statements presented in the Northwest Pipe Company (the "Company") 2011 Form 10-K. Certain information or footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of management, the accompanying condensed consolidated financial statements include all adjustments necessary (which are of a normal and recurring nature) for the fair statement of the results of the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2011, as presented in the Company's 2011 Annual Report on Form 10-K.

On April 1, 2011, the Company sold its interest in Northwest Pipe Asia Pte. Ltd. ("NWPA"), which was previously accounted for under the equity method of accounting. See Note 12 of the Condensed Consolidated Financial Statements for further information regarding the sale.

On August 1, 2011, the Company entered into an agreement which converted $2.3 million of loans and accrued interest outstanding with Lucid Energy Technologies, Inc., which have been accounted for as research and development expense within selling, general and administrative expense (see Note 14), into 50 percent ownership of Lucid Energy LLC ("Lucid Energy"). Lucid Energy is a clean energy company based in Portland, Oregon. Lucid Energy, in which the Company exercises significant influence but does not control, is accounted for under the equity method of accounting. The Condensed Consolidated Financial Statements include the accounts of Northwest Pipe Company and its subsidiaries in which the Company exercises control as of the financial statement date. Intercompany accounts and transactions have been eliminated.

Operating results for the three and nine months ended September 30, 2011 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2011.

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Inventories

9 Months Ended

Sep. 30, 2011

Inventories [Abstract]

Inventories

2. Inventories

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

	September 30, 2011		December 31, 2010
Short-term inventories:
Raw materials	$	67,547	$	58,610
Work-in-process		2,220		2,521
Finished goods		19,799		17,566
Supplies		2,323		2,190
		91,889		80,887
Long-term inventories:
Finished goods		2,436		2,554
Total inventories	$	94,325	$	83,441

The lower of cost or market adjustment was $4.3 million at September 30, 2011 and $4.5 million at December 31, 2010. Long-term inventories are recorded in other assets.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2011	Dec. 31, 2010
Condensed Consolidated Balance Sheets [Abstract]
Trade and other receivables, allowance for doubtful accounts	$ 2,118	$ 2,151
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	15,000,000	15,000,000
Common stock, shares issued	9,348,701	9,298,156
Common stock, shares outstanding	9,348,701	9,298,156

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Sale Of Business

9 Months Ended

Sep. 30, 2011

Sale Of Business [Abstract]

Sale Of Business

12. Sale of Business

On April 1, 2011, the Company sold its interest in NWPA for $0.8 million to the controlling owners of the business. The full amount has been received by the Company at September 30, 2011.

On June 1, 2011, the Company sold all assets of the traffic systems product line of the Tubular Products facility in Houston, Texas. Assets sold as part of this sale included the (i) raw materials, work-in-process, finished goods and related fuel and supplies inventories, (ii) tangible personal property located at the Houston facilities or used by the Company in connection with the traffic business, including machinery, equipment, tooling, operating and maintenance manuals, parts and all other tangible assets used in or related to the traffic business, (iii) receivables, and (iv) other assets. Total consideration of $13.7 million was received, resulting in a gain of $2.9 million recognized in other expense (income) during the second quarter of 2011. The calculation of the gain on sale included a write-off of $1.0 million of goodwill.

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Document And Entity Information	9 Months Ended
	Sep. 30, 2011	Apr. 23, 2012
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3
Entity Registrant Name	NORTHWEST PIPE CO
Entity Central Index Key	0001001385
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		9,371,111

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Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events [Abstract]

Subsequent Events

13. Subsequent Events

Amended and Restated Credit Agreement

On March 29, 2012 the Company entered into an amendment to the Company's current Amended and Restated Credit Agreement which is recorded as "Note payable to financial institution" on the balance sheet. A summary of the amendments is as follows:

• Extended the expiration date to April 30, 2013;

• Set aggregate commitments of the lenders at $115 million; and

• Waived compliance with certain covenants and made certain changes in the definition, method of calculation and amounts of certain covenants.

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Condensed Consolidated Statements Of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Condensed Consolidated Statements Of Operations [Abstract]
Net sales	$ 139,265	$ 112,770	$ 394,524	$ 289,277
Cost of sales	122,751	102,289	346,571	265,684
Gross profit	16,514	10,481	47,953	23,593
Selling, general and administrative expense	6,467	8,275	19,359	22,071
Operating income	10,047	2,206	28,594	1,522
Other expense (income)	950	138	1,347	(289)
Interest income	(4)	(216)	(27)	(643)
Interest expense	2,247	2,463	7,440	6,234
Income (loss) before income taxes	6,854	(179)	19,834	(3,780)
Provision for (benefit from) income taxes	3,570	(45)	8,641	(996)
Net income (loss)	$ 3,284	$ (134)	$ 11,193	$ (2,784)
Basic earnings (loss) per share	$ 0.35	$ (0.01)	$ 1.20	$ (0.30)
Diluted earnings (loss) per share	$ 0.35	$ (0.01)	$ 1.20	$ (0.30)
Shares used in per share calculations:
Basic	9,346	9,290	9,326	9,273
Diluted	9,373	9,290	9,359	9,273

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Share-Based Compensation

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

7. Share-based Compensation

The Company has one active stock incentive plan for employees and directors, the 2007 Stock Incentive Plan, which provides for awards of stock options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted shares of common stock, restricted stock units and performance awards. In addition, the Company has two inactive stock option plans, the 1995 Stock Option Plan for Nonemployee Directors and the Amended 1995 Stock Incentive Plan, under which previously granted options remain outstanding.

The Company recognizes compensation cost as service is rendered based on the fair value of the awards. The following summarizes share-based compensation expense recorded (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2011		2010		2011		2010
Cost of sales	$	4	$	3	$	13	$	38
Selling, general and administrative expenses		67		45	$	506	$	556
Total	$	71	$	48	$	519	$	594

As of September 30, 2011, unrecognized compensation expense related to the unvested portion of the Company's restricted stock units and performance awards was $176,000, which is expected to be recognized over a weighted average period of 0.7 years.

Stock Option Awards

A summary of the status of the Company's stock options as of September 30, 2011 and changes during the nine months then ended is presented below:

	Options Outstanding			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
								(In thousands)
Balance, January 1, 2011		145,209		$	17.64
Options granted		—
Options exercised or exchanged		(73,612	)		14.12
Options canceled		—
Balance, September 30, 2011		71,597			21.26		4.22	$	149
Exercisable, September 30, 2011		71,597			21.26		4.22	$	149

The total intrinsic value, defined as the difference between the current market value and the grant price, of options exercised or exchanged during the nine months ended September 30, 2011 was $758,000.

Restricted Stock Units and Performance Awards

A summary of the status of the Company's restricted stock units and performance awards as of September 30, 2011 and changes during the nine months then ended is presented below:

	Number of Restricted Stock Units and Performance Awards			Weighted Average Grant Date Fair Value
Unvested restricted stock units and performance awards at January 1, 2011		55,843		$	37.00
Restricted stock units and performance awards granted		18,000			23.79
Restricted stock units and performance awards vested		(8,979	)		27.29
Restricted stock units and performance awards canceled		(21,774	)		46.94
Unvested restricted stock units and performance awards at September 30, 2011		43,090			28.47

Restricted stock units (RSU's) and performance stock awards (PSA's) are measured at market value on the date of grant. RSU's are service-based awards and generally vest equally over a three-year period. PSA's are performance and service-based awards. PSA's are awarded at the end of a three-year performance period, if certain performance objectives are met, and vest equally over a two-year period. The Company recognizes compensation expense related to the performance awards based on the probable outcome of the performance conditions.

Stock Awards

For the nine months ended September 30, 2011 and 2010, stock awards of 6,261 shares and 0 shares, respectively, were granted to non-employee directors, which vested immediately upon issuance. The Company recorded compensation expense based on the fair market value per share of the awards on the grant date of $25.15 in 2011.

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Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information [Abstract]

Segment Information

6. Segment Information

The Company's operations are organized in two reportable segments, the Water Transmission Group and the Tubular Products Group, which are based on the nature of the products and the manufacturing process. The Water Transmission Group manufactures large-diameter, high-pressure steel pipeline systems for use in water infrastructure applications, primarily related to drinking water systems. These products are also used for hydroelectric power systems, wastewater systems and other applications. In addition, the Water Transmission Group makes products for industrial plant piping systems and certain structural applications. The Tubular Products Group manufactures and markets smaller diameter, electric resistance welded steel pipe used in a wide range of applications, including energy, construction, and agricultural systems. The Tubular Products Group also manufactured and marketed welded steel pipe used in traffic signpost applications through June 1, 2011 (see Note 12). These two segments represent distinct business activities, which management evaluates based on segment gross profit and operating income. Transfers between segments in the periods presented were not material.

	Three months ended September 30,						Nine months ended September 30,
	2011			2010			2011			2010
	(in thousands)						(in thousands)
Net sales:
Water Transmission	$	76,953		$	59,323		$	210,057		$	168,068
Tubular Products		62,312			53,447			184,467			121,209
Total	$	139,265		$	112,770		$	394,524		$	289,277
Gross profit:
Water Transmission	$	13,345		$	6,880		$	34,770		$	17,627
Tubular Products		3,169			3,601			13,183			5,966
Total	$	16,514		$	10,481		$	47,953		$	23,593
Operating income (loss):
Water Transmission	$	10,747		$	4,521		$	28,150		$	10,772
Tubular Products		2,349			2,529			10,502			3,533
Corporate		(3,049	)		(4,844	)		(10,058	)		(12,783	)
Total	$	10,047		$	2,206		$	28,594		$	1,522

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Restatement Of Previously Issued Financial Statements

9 Months Ended

Sep. 30, 2011

Restatement Of Previously Issued Financial Statements [Abstract]

Restatement Of Previously Issued Financial Statements

14. Restatement of Previously Issued Financial Statements

Subsequent to the issuance of our unaudited condensed consolidated financial statements for the quarter ended June 30, 2011, the Company determined that there were errors included in the previously issued condensed consolidated financial statements as described below. As a result, we have restated our condensed consolidated financial statements as of December 31, 2010 and for the three and nine months ended September 30, 2010 to correct the errors described below.

The restatement corrects the following errors:

Depreciation

• The Company's historical method of systematically and rationally allocating equipment depreciation using the units of production depreciation methodology (the "Units of Production Method") requires an estimate of future tons of production over the remaining useful lives of equipment. The estimates of future tons of production over the remaining useful lives of equipment were not properly re-evaluated subsequent to the initial assumptions utilized in the adoption, in 2006, of the Units of Production Method. To appropriately apply the Units of Production Method, the Company should have periodically re-evaluated the assumptions underlying its application of the Units of Production Method and changed the assumptions underlying the accounting estimate beginning January 1, 2009. The effects of correcting this error are a net increase in depreciation expense and a net decrease in loss on disposal, both of which are included in cost of sales, and a net increase in accumulated depreciation.

• The Company also corrected its estimate of the remaining lives of non-operating equipment depreciated using the straight-line method of depreciation. The effects of correcting this error are a net decrease in depreciation expense, which is reflected in selling, general and administrative expense.

• Historical salvage value estimates used to systematically and rationally allocate property and equipment depreciation were incorrect as they did not sufficiently consider the estimated disposal value at the end of the property and equipment's useful life. The effects of correcting this error are an increase in depreciation expense, which is reflected in cost of sales and selling, general and administrative expense, and an increase in accumulated depreciation.

Other Errors

• A contractual arrangement entered into with Lucid Energy LLC ("Lucid Energy") during 2008 was incorrectly accounted for as notes receivable within Other Assets. The contractual arrangement with Lucid Energy represented an interest in a variable interest entity which should have resulted in the entity being consolidated during 2009 and subsequently deconsolidated following the retrospective adoption of the FASB authoritative guidance which changed the method of identifying the primary beneficiary. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements. Upon deconsolidation, the Company's investment in the entity should have been recorded as research and development expense within selling, general and administrative expense. The adjustments required to correct these errors have resulted in an increase in selling, general, and administrative expense, a decrease in interest income, and a decrease in other assets.

• Certain equipment leases historically accounted for as operating leases should have been recorded as capital leases. The correction of this error increases depreciation expense and decreases rental expense, both of which are included in cost of sales, and increases interest expense in each period. The correction of this error also increased property and equipment, net, and capital lease obligations.

• Certain costs capitalized upon the relocation of machinery and equipment to our Bossier City facility in 2008 and 2009 should have been expensed. The effects of correcting these errors were a reduction in machinery and equipment of $2.8 million as of September 30, 2011, and the related tax effects.

• Certain previously identified immaterial errors were corrected as part of the restatement.

The impact on the Company's previously reported condensed consolidated statement of operations for the three and nine months ended September 30, 2010 are shown in the following tables (in thousands, except per share data):

				Restatement Adjustments
	As  Previously Reported			Depreciation			Other			As Restated
Three Months Ended September 30, 2010
Net sales	$	112,770		$	—		$	—		$	112,770
Cost of sales		101,302			1,147			(160	)		102,289
Gross profit		11,468			(1,147	)		160			10,481
Selling, general and administrative		7,988			2			285			8,275
Operating income		3,480			(1,149	)		(125	)		2,206
Other expense		138			—			—			138
Interest income		(243	)		—			27			(216	)
Interest expense		2,206			—			257			2,463
Income (loss) before income taxes		1,379			(1,149	)		(409	)		(179	)
Provision for (benefit from) income taxes		686			(540	)		(191	)		(45	)
Net income (loss)	$	693		$	(609	)	$	(218	)	$	(134	)
Basic income (loss) per share	$	0.07								$	(0.01	)
Diluted income (loss) per share	$	0.07								$	(0.01	)

				Restatement Adjustments
	As  Previously Reported			Depreciation			Other			As Restated
Nine Months Ended September 30, 2010
Net sales	$	289,277		$	—		$	—		$	289,277
Cost of sales		262,945			3,151			(412	)		265,684
Gross profit		26,332			(3,151	)		412			23,593
Selling, general and administrative		21,254			(38	)		855			22,071
Operating income		5,078			(3,113	)		(443	)		1,522
Other income		(289	)		—			—			(289	)
Interest income		(709	)		—			66			(643	)
Interest expense		5,482			—			752			6,234
Income (loss) before income taxes		594			(3,113	)		(1,261	)		(3,780	)
Provision for (benefit from) income taxes		242			(914	)		(324	)		(996	)
Net income (loss)	$	352		$	(2,199	)	$	(937	)	$	(2,784	)
Basic income (loss) per share	$	0.04								$	(0.30	)
Diluted income (loss) per share	$	0.04								$	(0.30	)

The following table presents the impact of the restatement adjustments on the Company's previously reported consolidated balance sheet at December 31, 2010 (in thousands):

				Restatement Adjustments
	As  Previously Reported			Depreciation			Other			As Restated
As of December 31, 2010
Assets
Current assets:
Cash and cash equivalents	$	51		$	—		$	—		$	51
Trade and other receivables, net		66,474			—			—			66,474
Costs and estimated earnings in excess of billings on uncompleted contracts		45,533			—			—			45,533
Inventories		80,887			—			—			80,887
Refundable income taxes		15,299			—			(200	)		15,099
Deferred income taxes		6,293			—			—			6,293
Prepaid expenses and other		2,163			—			—			2,163
Total current assets		216,700			—			(200	)		216,500
Property and equipment, net		171,766			(24,214	)		6,722			154,274
Goodwill		21,451			—			—			21,451
Other assets		25,288			(243	)		(2,387	)		22,658
Total assets	$	435,205		$	(24,457	)	$	4,135		$	414,883
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	5,714		$	—		$	—		$	5,714
Current portion of capital lease obligations		1,087			—			2,170			3,257
Accounts payable		28,463			—			—			28,463
Accrued liabilities		11,448			—			—			11,448
Billings in excess of costs and estimated earnings on uncompleted contracts		14,808			—			—			14,808
Total current liabilities		61,520			—			2,170			63,690
Note payable to financial institution		68,000			—			—			68,000
Long-term debt, less current portion		17,786			—			—			17,786
Capital lease obligations, less current portion		7,731			—			7,974			15,705
Deferred income taxes		25,694			(9,331	)		(1,781	)		14,582
Pension and other long-term liabilities		8,828			—			—			8,828
Total liabilities		189,559			(9,331	)		8,363			188,591
Stockholders' equity:
Preferred stock		—			—			—			—
Common stock		93			—			—			93
Additional paid-in-capital		107,578			—			—			107,578
Retained earnings		140,494			(15,126	)		(4,891	)		120,477
Accumulated other comprehensive loss		(2,519	)		—			663			(1,856	)
Total stockholders' equity		245,646			(15,126	)		(4,228	)		226,292
Total liabilities and stockholders' equity	$	435,205		$	(24,457	)	$	4,135		$	414,883

The following tables present the impact of the restatement adjustments on the Company's previously reported condensed consolidated statement of cash flows for the nine months ended September 30, 2010. Unrealized gain on foreign currency forward contracts in the amount of $0.7 million and equity in earnings of an unconsolidated subsidiary, net of dividends in the amount of $0.2 million have been reclassified within net cash used in operating activities to conform to the current period presentation. In addition, issuance of notes receivable in the amount of $0.5 million and insurance proceeds in the amount of $0.3 million have been reclassified within net cash used in investing activities to conform to current period presentation in the condensed consolidated statements of cash flows. These reclassifications are presented in the Restatement Adjustments column and had no impact on cash flows from operations, income from operations, cash flows from investing activities, net income, or total assets.

	Nine Months Ended September 30, 2010
	As Previously Reported			Restatement Adjustments			As Restated
Cash flows from operating activities:
Net income (loss)	$	352		$	(3,136	)	$	(2,784	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		5,186			5,035			10,221
Amortization of intangible assets		90			66			156
Provision for doubtful accounts		(124	)		—			(124	)
Equity in earnings of unconsolidated subsidiary, net of dividends received		—			192			192
Amortization of debt issuance costs		905			—			905
Deferred income taxes		5,389			(1,238	)		4,151
Loss on disposal of property and equipment		528			(300	)		228
Stock-based compensation expense		594			—			594
Tax benefit from stock option plans		31			—			31
Unrealized gain on foreign currency forward contracts		—			(687	)		(687	)
Changes in operating assets and liabilities:
Trade and other receivables, net		(36,866	)		—			(36,866	)
Costs and estimated earnings in excess of billings on uncompleted contracts, net		(8,482	)		—			(8,482	)
Inventories		(6,419	)		—			(6,419	)
Refundable income taxes		(3,255	)		—			(3,255	)
Prepaid expenses and other		1,620			(4	)		1,616
Accounts payable		3,308			—			3,308
Accrued and other liabilities		1,668			673			2,341
Net cash used in operating activities		(35,475	)		601			(34,874	)
Cash flows from investing activities:
Additions to property and equipment		(15,537	)		—			(15,537	)
Proceeds from sale of property and equipment		18			—			18
Issuance of notes receivable		—			(450	)		(450	)
Insurance proceeds		—			321			321
Other investing activities		(984	)		984			—
Net cash used in investing activities		(16,503	)		855			(15,648	)
Cash flows from financing activities:
Tax witholdings related to net share settlements of restricted share awards and performance shares		(87	)		—			(87	)
Payments on long-term debt		(4,286	)		—			(4,286	)
Borrowings under note payable to financial institutions		159,977			—			159,977
Payments on note payable to financial institutions		(102,867	)		—			(102,867	)
Borrowings from capital lease obligation		2,865			—			2,865
Payments on capital lease obligations		(303	)		(1,456	)		(1,759	)
Payments of debt issuance costs		(3,315	)		—			(3,315	)
Net cash provided by financing activities		51,984			(1,456	)		50,528
Change in cash and cash equivalents		6			—			6
Cash and cash equivalents, beginning of period		31			—			31
Cash and cash equivalents, end of period	$	37		$	—		$	37
Non-cash investing and financing activities:
Escrow account related to capital lease financing	$	2,726			—		$	2,726
Accrued property and equipment purchases		1,725			—			1,725

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Earnings (Loss) Per Share

9 Months Ended

Sep. 30, 2011

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share

10. Earnings (Loss) per Share

Earnings (loss) per basic and diluted weighted average common share outstanding was calculated as follows for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010
Net income (loss) (in thousands)	$	3,284	$	(134	)	$	11,193	$	(2,784	)
Basic weighted-average common shares outstanding		9,346,397		9,289,921			9,326,070		9,272,668
Effect of potentially dilutive common shares(1)		26,997		—			33,188		—
Diluted weighted-average common shares outstanding		9,373,394		9,289,921			9,359,258		9,272,668
Earnings (loss) per common share:
Earnings (loss) per basic common share	$	0.35	$	(0.01	)	$	1.20	$	(0.30	)
Earnings (loss) per diluted common share	$	0.35	$	(0.01	)	$	1.20	$	(0.30	)
Antidilutive shares not included in diluted common share calculation		10,000		75,403			16,261		33,049

(1) Represents the effect of the assumed exercise of stock options and the vesting of restricted stock units and performance stock awards, based on the treasury stock method

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Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

8. Income Taxes

The Company files income tax returns in the United States Federal jurisdiction, in a limited number of foreign jurisdictions, and in many state jurisdictions. With few exceptions, the Company is no longer subject to U.S. Federal, state or foreign income tax examinations for years before 2007.

The Company had $125,000 of unrecognized tax benefits at September 30, 2011 and December 31, 2010. The Company does not believe it is reasonably possible that the total amounts of unrecognized tax benefits will change significantly in the following twelve months; however, actual results could differ from those currently expected.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. The Company provided for income taxes at estimated effective tax rates of 52.1% and 43.6%, respectively, for the three and nine month periods ended September 30, 2011, and estimated effective tax rates of 25.1% and 26.3%, respectively, for the three and nine month periods ended September 30, 2010.

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Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2011

Comprehensive Income (Loss) [Abstract]

Comprehensive Income (Loss)

9. Comprehensive Income (Loss)

Comprehensive income includes all changes in stockholders' equity for the three and nine month periods ended September 30, 2011 and 2010 except those resulting from investments by and distributions to stockholders as follows (in thousands):

	Three Months Ended September 30,					Nine Months Ended September 30,
	2011		2010			2011		2010
Net income (loss)	$	3,284	$	(134	)	$	11,193	$	(2,784	)
Pension liability adjustment, net of tax		44		44			132		132
Unrealized gain (loss) on derivative financial instruments, net of tax		253		(18	)		377		91
Total comprehensive income (loss)	$	3,581	$	(108	)	$	11,702	$	(2,561	)

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Recent Accounting And Reporting Developments

9 Months Ended

Sep. 30, 2011

Recent Accounting And Reporting Developments [Abstract]

Recent Accounting And Reporting Developments

11. Recent Accounting and Reporting Developments

In September 2011, the FASB issued ASU 2011-08, which simplified the goodwill impairment test by giving companies the option to perform a qualitative assessment to determine whether the performance of the two step impairment testing is necessary. This guidance is effective for interim and annual periods beginning after December 15, 2011 and early adoption is allowed. The Company plans to early adopt this guidance for its annual impairment test as of December 31, 2011, and does not expect the adoption to have a material impact on its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, which eliminates the option to present components of other comprehensive income as part of the Statement of Stockholders Equity. All changes in components of stockholders' equity must be presented in (1) a single continuous statement of comprehensive income, which presents the total of comprehensive income, the components of net income, and the components of comprehensive income, or (2) two separate but consecutive statements. Under either presentation method, reclassification adjustments between other comprehensive income and net income are required to be presented on the face of the financial statements. In October 2011, the FASB decided to delay the effective date of the requirement to present reclassifications of other comprehensive income on the face of the income statement. All other guidance in ASU-05 is effective for interim and annual periods beginning after December 15, 2011 and will be applied retrospectively. The adoption of this guidance does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income and thus will have a presentation only impact.

In May 2011, the FASB issued ASU 2011-04, which amends the wording used to describe the requirements for measuring fair value and expands fair value disclosure requirements. This guidance is effective for interim and annual periods beginning after December 15, 2011. The adoption of this guidance is not expected to have a significant impact on the Company's consolidated financial position, results of operations or cash flows as the new requirements are primarily disclosure related.

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Condensed Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash Flows From Operating Activities:
Net income (loss)	$ 11,193	$ (2,784)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	10,703	10,221
Amortization of intangible assets	50	156
Allowance on notes receivable	4,071
Provision for doubtful accounts	(33)	(124)
Equity in earnings of unconsolidated subsidiary, net of dividends received	394	192
Amortization of debt issuance costs	1,532	905
Deferred income taxes	1,041	4,151
Loss on disposal of property and equipment	180	228
Gain on sale of business	(2,887)
Stock based compensation expense	519	594
Tax benefit from stock option plans		31
Unrealized gain on foreign currency forward contracts	(804)	(687)
Changes in operating assets and liabilities:
Trade and other receivables, net	(21,468)	(36,866)
Costs and estimated earnings in excess of billings on uncompleted contracts, net	(5,801)	(8,482)
Inventories	(14,549)	(6,419)
Refundable income taxes	15,099	(3,255)
Prepaid expenses and other assets	1,087	1,616
Accounts payable	(1,333)	3,308
Accrued and other liabilities	10,508	2,341
Net cash provided by (used in) operating activities	9,502	(34,874)
Cash Flows From Investing Activities:
Additions to property and equipment	(11,496)	(15,537)
Proceeds from sale of business	13,727
Proceeds from the sale of property and equipment	96	18
Issuance of notes receivable		(450)
Insurance proceeds		321
Other investing activities	800
Net cash provided by (used in) investing activities	3,127	(15,648)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock	146
Tax withholdings related to net share settlements of restricted stock awards and performance shares	(51)	(87)
Payments on long-term debt	(4,286)	(4,286)
Borrowings under note payable to financial institution	109,050	159,977
Payments on note payable to financial institution	(115,050)	(102,867)
Borrowings from capital lease obligations		2,865
Payments on capital lease obligations	(2,417)	(1,759)
Payments of debt amendment costs		(3,315)
Net cash provided by (used in) financing activities	(12,608)	50,528
Change in cash and cash equivalents	21	6
Cash and cash equivalents, beginning of period	51	31
Cash and cash equivalents, end of period	72	37
Non-cash investing activity:
Escrow account related to capital lease financing	2,726	2,726
Accrued property and equipment purchases	$ 1,834	$ 1,725

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Commitments And Contingencies

9 Months Ended

Sep. 30, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

5. Commitments and Contingencies

Class Action and Derivative Lawsuits

On November 20, 2009, a complaint against the Company, captioned Richard v. Northwest Pipe Co. et al., No. C09-5724 RBL ("Richard"), was filed in the United States District Court for the Western District of Washington. The plaintiff is allegedly a purchaser of the Company's stock. In addition to the Company, Brian W. Dunham, the Company's former President and Chief Executive Officer, and Stephanie J. Welty, the Company's former Chief Financial Officer, are named as defendants. The complaint alleges that defendants violated Section 10(b) of the Securities Exchange Act of 1934 by making false or misleading statements between April 23, 2008 and November 11, 2009. Plaintiff seeks to represent a class of persons who purchased the Company's stock during the same period, and seeks damages for losses caused by the alleged wrongdoing.

A similar complaint, captioned Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund v. Northwest Pipe Co. et al., No. C09-5791 RBL ("Plumbers"), was filed against the Company in the same court on December 22, 2009. In addition to the Company, Brian W. Dunham, Stephanie J. Welty and William R. Tagmyer, the Company's current Chairman of the Board, are named as defendants in the Plumbers complaint. In the Plumbers complaint, as in the Richard complaint, the plaintiff is allegedly a purchaser of the Company's stock and asserts that defendants violated Section 10(b) of the Securities Exchange Act of 1934 by making false or misleading statements between April 23, 2008 and November 11, 2009. Plaintiff seeks to represent a class of persons who purchased the Company's stock during that period, and seeks damages for losses caused by the alleged wrongdoing.

The Richard action and the Plumbers action were consolidated on February 25, 2010. Plumbers and Pipefitters Local No. 630 Pension-Annuity Trust Fund was appointed lead plaintiff in the consolidated action. Defendants and lead plaintiff subsequently agreed that defendants did not need to respond immediately to either of the two outstanding complaints, and that a consolidated amended complaint would be filed within 45 days of the Company having completed the filing of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009 and the 2009 Form 10-K with the SEC. A consolidated amended complaint was filed by the plaintiff on December 21, 2010, and our motion to dismiss was filed on February 25, 2011, as were similar motions filed by the individual defendants. Briefing on those motions concluded on May 24, 2011. On August 26, 2011, the Court denied all defendants' motions to dismiss, and the Company filed its answer to the consolidated amended complaint on October 24, 2011. The parties have conducted limited discovery and participated in an initial settlement mediation on January 30, 2012, with additional sessions anticipated in the future. By agreement of the parties, no further discovery will take place until after the mediation process is exhausted. The Company intends to vigorously defend itself against these claims. This securities litigation is at an early stage and, at this time, it is not possible to predict its outcome. Therefore, the Company has not accrued any charges related to this litigation.

On March 3, 2010, the Company was served with a derivative complaint, captioned Ruggles v. Dunham et al., No. C10-5129 RBL ("Ruggles"), and filed in the United States District Court for the Western District of Washington. The plaintiff in this action is allegedly a current shareholder of the Company. The Company is a nominal defendant in this litigation. Plaintiff seeks to assert, on the Company's behalf, claims against Brian W. Dunham, Stephanie J. Welty, William R. Tagmyer, Keith R. Larson, Wayne B. Kingsley, Richard A. Roman, Michael C. Franson and Neil R. Thornton. The asserted basis of the claims is that defendants breached fiduciary duties to the Company by causing the Company to make improper statements between April 23, 2008 and August 7, 2009. Plaintiff seeks to recover, on the Company's behalf, damages for losses caused by the alleged wrongdoing.

On September 23, 2011, the Company was served with a derivative complaint, captioned Grivich v. Dunham, et al., No. 11-2-03678-6 ("Grivich"), and filed in the Superior Court of Washington for Clark County. The plaintiff in this action is allegedly a current shareholder of the Company. The Company is a nominal defendant in this litigation. Plaintiff seeks to assert, on the Company's behalf, claims against Brian W. Dunham, Stephanie J. Welty, William R. Tagmyer, Keith R. Larson, Wayne B. Kingsley, Richard A. Roman, Michael C. Franson and Neil R. Thornton. The asserted basis of the claims is that defendants breached fiduciary duties to the Company between April 2, 2007 and the date of the Complaint. Plaintiff seeks to recover, on the Company's behalf, damages for losses caused by the alleged wrongdoing.

On October 14, 2011, another derivative complaint, captioned Richard v. Dunham, et al., No. 11-2-04080-5 ("Richard Deriv."), was filed in the Superior Court of Washington for Clark County. The plaintiff in this action is allegedly a current shareholder of the Company. The Company is a nominal defendant in this litigation. Plaintiff seeks to assert, on the Company's behalf, claims against Brian W. Dunham, Stephanie J. Welty, William R. Tagmyer, Keith R. Larson, Wayne B. Kingsley, Richard A. Roman, Michael C. Franson and Neil R. Thornton. The asserted basis of the claims is that defendants breached fiduciary duties to the Company between April 2, 2007 and the date of the Complaint. Plaintiff seeks to recover, on the Company's behalf, damages for losses caused by the alleged wrongdoing.

An amended complaint in the Ruggles action was filed on November 10, 2011, and the defendant responded to the complaint by filing a motion to dismiss, which motion is still pending. The derivative parties participated in the initial settlement mediation described above and will participate in any follow up sessions. It should also be noted that derivative claims by their nature do not seek to recover damages from the Company, but purport instead to seek to recover damages for the benefit of the Company. These cases are at a very early stage and, at this time, it is not possible to predict their outcome. Therefore, the Company has not accrued any charges related to them.

SEC Investigation

On March 8, 2010, the staff of the Enforcement Division of the SEC advised our counsel that they had obtained a formal order of investigation with respect to matters related to the Audit Committee investigation. We are cooperating fully with the SEC in connection with these matters. We cannot predict if, when or how they will be resolved or what, if any, actions we may be required to take as part of any resolution of these matters. Any action by the SEC or other governmental agency could result in civil or criminal sanctions against us and/or certain of our current and former officers, directors and employees. The investigation is at an early stage and, at this time, it is not possible to predict its outcome. Therefore, we have not accrued any charges related to this investigation.

Other Matters

On December 1, 2000, a section of the lower Willamette River known as the Portland Harbor was included on the National Priorities List at the request of the U.S. Environmental Protection Agency (the "EPA"). While the Company's Portland, Oregon manufacturing facility does not border the Willamette River, an outfall from the facility's storm water system drains into a neighboring property's privately owned stormwater system and slip. Since the listing of the site, the Company was notified by the EPA and the Oregon Department of Environmental Quality (the "ODEQ") of potential liability under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). In 2008, the Company was asked to file information disclosure reports with the EPA (CERCLA 104 (e) information request). By agreement with the EPA, the ODEQ is responsible for overseeing remedial investigation and source control activities for all upland sites to investigate sources and prevent future contamination to the river. A remedial investigation and feasibility study (RI/FS) of the Portland Harbor is currently being directed by a group of potentially responsible parties known as the Lower Willamette Group (the "LWG"). The Company made a payment of $175,000 to the LWG in June 2007 as part of an interim settlement, and is under no obligation to make any further payment. A draft remedial investigation report was submitted to the EPA by the LWG in the fall of 2009; the final draft remedial investigation was submitted to EPA in the fall of 2011. The feasibility study is underway, and a draft is expected to be completed by the LWG in the spring of 2012.

In 2001, groundwater containing elevated organic compounds ("VOCs") was identified in one localized area of property leased adjacent to the Portland facility furthest from the river. Assessment work in 2002 and 2003 to further characterize the groundwater is consistent with the initial conclusion that the source of the VOC's is located off of Company-owned property. In February 2005, the Company entered into a Voluntary Agreement for Remedial Investigation and Source Control Measures ("Agreement") with the ODEQ. The Company is one of 90 Upland Source Control Sites working with the ODEQ on Source Control and is ranked a "medium" priority. The Company performed Remedial Investigation work required under the Agreement and submitted a draft Remedial Investigation/Source Control Evaluation Report on December 30, 2005. The conclusions of the report indicated that the VOCs found in the groundwater do not present an unacceptable risk to human or ecological receptors in the Willamette River. The report also indicated there is no evidence at this time showing a connection between detected VOCs in groundwater and Willamette River sediments. In 2009, the ODEQ requested the Company to revise its Remedial Investigation/Source Control Evaluation Report from 2005 to include recent information available related to nearby properties. The Company expects to submit an Expanded Risk Assessment for the VOC's in Groundwater during or after the first quarter of 2012, following the completion of a paving project at the Portland facility.

Also, based on the remedial investigation and reporting required under the Portland, Oregon manufacturing facility's National Pollutant Discharge Elimination System permit for storm water, the Company and the ODEQ have identified small amounts of polynuclear aromatic hydrocarbons (PAHs) and polychlorinated biphenyls (PCBs) and trace amounts of zinc in storm water. Storm water from the Portland, Oregon manufacturing facility site is discharged into a communal storm water system that ultimately discharges into a neighboring property's privately owned slip. The slip was historically used for shipbuilding and subsequently for ship breaking and metal recycling. Studies of the river sediments have revealed concentration of PAHs, PCBs, and zinc, which are common constituents in urban storm water discharges. To minimize the zinc traces in its storm water, the Company painted a substantial part of the Portland facility's roofs and made certain paving improvements at the Portland facility. In June 2009, under the ODEQ Agreement, the Company submitted a Final Supplemental Work Plan to evaluate and assess soil and storm water, and further assess groundwater risk. In May 2010, the Company submitted a remediation plan related to soil contamination, which ODEQ approved in August 2010. Since August 2010, the Company has been engaged in performing the approved remediation plan which has included an upgrade to the fuel and waste storage systems (completed in the fourth quarter of 2011) and a storm water filtration system ( completed in the first quarter of 2012). The remediation plan also required the excavation of a localized soil area to remove soil containing PAHs (completed in the third quarter of 2011). During the localized soil excavation in the third quarter of 2011, additional stained soil was discovered, and at the request of ODEQ, the Company is developing an additional Work Plan to characterize the nature and extent of soil and/or groundwater impacts from the staining. The Company spent approximately $926,000 during 2011 to address storm water system upgrades and soil remediation, and expects to spend an additional $1.6 million in 2012 to complete the work specified in the Work Plans.

Concurrent with the activities of the EPA and the ODEQ, the Portland Harbor Natural Resources Trustee Council ("Trustees") sent some or all of the same parties, including the Company, a notice of intent to perform a Natural Resource Damage Assessment ("NRDA") for the Portland Harbor Site to determine the nature and extent of natural resource damages under CERCLA section 107. The Trustees for the Portland Harbor Site consist of representatives from several Northwest Indian Tribes, three federal agencies and one state agency. The Trustees act independently of the EPA and the ODEQ. In 2009, the Trustees completed phase one of their three-phase NRDA. Phase one of the NRDA consisted of environmental studies to fill gaps in the information available from the EPA, and development of a framework for evaluating, quantifying and determining the extent of injuries to the natural resource. Phase two of the NRDA began in 2010 and consists largely of implementing the framework developed in phase one.

The Trustees have encouraged potentially responsible parties to voluntarily participate in the funding of their injury assessments and several of those parties have agreed to do so. In 2009, one of the Tribal Trustees (the Yakima Nation) resigned and has requested funding from the same parties to support its own assessment. The Company has not assumed any payment obligation or liability related to either request. The extent of the Company's obligation with respect to Portland Harbor matters is not known, and no further adjustment to the consolidated financial statements has been recorded as of September 30, 2011.

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

From time to time, the Company is involved in litigation relating to claims arising out of its operations in the normal course of its business. The Company maintains insurance coverage against potential claims in amounts that are believed to be adequate. The Company believes that it is not presently a party to any other litigation, the outcome of which would have a material adverse effect on its business, financial condition, results of operations or cash flows.

Guarantees

The Company has entered into certain stand-by letters of credit that total $3.5 million at September 30, 2011. The stand-by letters of credit relate to workers' compensation insurance and equipment financing.