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Steel issues are also impacting the Water Transmission Group. Historically , we have had firm quotes for steel when we bid on individual projects. In the current envir onment, it is not always clear what the steel price will be when steel is actually ordered. We are wor king with our vendors and modifying our bidding practices in order to manage this issue. To date, we have had limited negative impacts from changing prices. How well we manage this issue today and in the future will be key to our 2004 results. 

We are also concerned about supply issues in the Water Transmission Gr oup. It is important to our profitability to run at relatively high utilization levels. We will not be able to maintain this without an adequate steel supply. Supply issues, like pricing, have already had some impact on us. As we look ahead, we expect our supply situation to stabilize. How ever, this situation is very dynamic and predictions are difficult. 

## Conclusion 

There is an often-used saying that wishes, “May you live in interesting times.” T he unprecedented activities in the steel markets, slow economic recovery, and political uncertainties make t hese, indeed, very interesting times. At Northwest Pipe Company, we are committed to working together to  make the most of these interesting times. We believe our strategy is sound, our progress in refining our  operations encouraging, and our outlook favorable. We are looking forward to a better year in 2004. 

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We thank our customers and suppliers for their continued partnership. To our employees, I say thank you for your efforts to make Northwest Pipe the strong compa ny it is. And to our shareholders, I thank you for your continued confidence and support. 

Sincerely, 

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