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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934


FOR QUARTER ENDED MARCH 31, 2004


COMMISSION FILE NO. 1-3920




NORTH AMERICAN GALVANIZING & COATINGS, INC.
- --------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)



DELAWARE 71-0268502
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(State of Incorporation) (I.R.S. Employer Identification No.)


2250 EAST 73RD STREET
TULSA, OKLAHOMA 74136
- --------------------------------------------------------------------------------
(Address of principal executive offices)


Registrant's telephone number: (918) 494-0964


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 and 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 [_]

AMENDMENT

- --------------------------------------------------------------------------------

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). YES [_] NO [X]

END OF AMENDMENT

- --------------------------------------------------------------------------------

Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of March 31, 2004.

Common Stock $ .10 Par Value ..................... 6,794,293

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NORTH AMERICAN GALVANIZING & COATINGS, INC.
AND SUBSIDIARY

INDEX TO QUARTERLY REPORT ON FORM 10-Q


PAGE
----
PART I. FINANCIAL INFORMATION

Forward Looking Statements or Information ...................... 2

Item 1. Financial Statements

Independent Accountants' Review Report ................ 3

Condensed Consolidated Balance Sheets as of March
31, 2004 (unaudited), and December 31, 2003 ...... 4

Condensed Consolidated Statements of Operations
and Comprehensive Income for the three months
ended March 31, 2004 and 2003 (unaudited) ........ 5

Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 2004
and 2003 (unaudited) ............................. 6

Notes to Condensed Consolidated Interim Financial
Statements for the three months ended March
31, 2004 and 2003 (unaudited) .................... 7-13

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .............. 14-23

Item 3. Quantitative and Qualitative Disclosure About
Market Risks ..................................... 23

Item 4. Controls and Procedures ............................... 24


PART II. OTHER INFORMATION .............................................. 25


SIGNATURES AND CERTIFICATIONS ............................................ 26



FORWARD LOOKING STATEMENTS OR INFORMATION

Certain statements in this Form 10-Q, including information set forth under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations", constitute "Forward-Looking Statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements are typically
punctuated by words or phrases such as "anticipates," "estimate," "should,"
"may," "management believes," and words or phrases of similar import. The
Company cautions investors that such forward-looking statements included in this
Form 10-Q, or hereafter included in other publicly available documents filed
with the Securities and Exchange Commission, reports to the Company's
stockholders and other publicly available statements issued or released by the
Company involve significant risks, uncertainties, and other factors which could
cause the Company's actual results, performance (financial or operating) or
achievements to differ materially from the future results, performance
(financial or operating) or achievements expressed or implied by such
forward-looking statements. Factors that could cause or contribute to such
differences could include, but are not limited to, changes in demand, prices,
and the raw materials cost of zinc; changes in economic conditions of the
various markets the Company serves, as well as the other risks detailed herein
and in the Company's reports filed with the Securities and Exchange Commission.
The Company believes that the important factors set forth in the Company's
cautionary statements at Exhibit 99 to this Form 10-Q could cause such a
material difference to occur and investors are referred to Exhibit 99 for such
cautionary statements.



























2


INDEPENDENT ACCOUNTANTS' REVIEW REPORT


To the Board of Directors and Stockholders of
North American Galvanizing & Coatings, Inc.

We have reviewed the accompanying condensed consolidated balance sheet of North
American Galvanizing & Coatings, Inc. and subsidiary ("NAGC" or the "Company")
as of March 31, 2004, and the related condensed consolidated statements of
operations and comprehensive income, and cash flows for the three months ended
March 31, 2004 and 2003. These interim financial statements are the
responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.

Based on our reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet of
North American Galvanizing & Coatings, Inc. and subsidiary as of December 31,
2003, and the related consolidated statements of operations and comprehensive
income, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated March 26, 2004, we expressed an
unqualified opinion on those consolidated financial statements.


/s/Deloitte & Touche LLP
Tulsa, Oklahoma
May 14, 2004





3

NORTH AMERICAN GALVANIZING & COATINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS


UNAUDITED
MARCH 31 DECEMBER 31
(DOLLARS IN THOUSANDS) 2004 2003
===============================================================================

ASSETS
CURRENT ASSETS
Cash $ 123 $ 56
Investments -- 73
Trade receivables, net 5,177 4,594
Inventories 5,821 5,408
Prepaid expenses and other assets 629 87
Deferred tax asset, net 754 746
------------ ------------
TOTAL CURRENT ASSETS 12,504 10,964
------------ ------------

PROPERTY, PLANT AND EQUIPMENT, AT COST
Land 1,962 1,962
Galvanizing plants and equipment 33,530 34,941
------------ ------------
35,492 36,903
Less: Allowance for depreciation 13,666 14,529
Construction in progress 420 286
------------ ------------
TOTAL PROPERTY, PLANT AND EQUIPMENT, NET 22,246 22,660
------------ ------------

GOODWILL, NET OF ACCUMULATED AMORTIZATION 3,389 3,389
OTHER ASSETS 322 354
------------ ------------

TOTAL ASSETS $ 38,461 $ 37,367
============ ============


LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations $ 1,410 $ 1,408
Current portion of bonds payable 667 656
Trade accounts payable 1,040 480
Accrued payroll and employee benefits 663 623
Other taxes 184 316
Other accrued liabilities 769 874
------------ ------------
TOTAL CURRENT LIABILITIES 4,733 4,357
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DEFERRED TAX LIABILITY, NET 774 774
LONG-TERM OBLIGATIONS 7,430 6,768
BONDS PAYABLE 6,458 6,626
SUBORDINATED NOTES PAYABLE 960 957
------------ ------------
TOTAL LIABILITIES 20,355 19,842
------------ ------------

COMMITMENTS AND CONTINGENCIES (NOTE 8)

STOCKHOLDERS' EQUITY
Common stock 819 819
Additional paid-in capital 17,314 17,343
Retained earnings 5,706 5,496
Other comprehensive income -- 6
Common shares in treasury at cost (5,733) (5,779)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 18,106 17,885
------------ ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 38,461 $ 37,367
============ ============



See notes to condensed consolidated interim financial statements.

4

NORTH AMERICAN GALVANIZING & COATINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (UNAUDITED)



THREE MONTHS ENDED MARCH 31
============================
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 2004 2003
===============================================================================

SALES $ 8,558 $ 8,040
Cost of sales 6,005 6,003
Selling, general & administrative expenses 1,395 1,452
Depreciation expense 684 775
------------ ------------
TOTAL COSTS AND EXPENSES 8,084 8,230
------------ ------------

OPERATING INCOME (LOSS) 474 (190)
Other (income), net (25) --
Interest expense, net 161 308
------------ ------------

Income (Loss) from continuing operations before
income taxes 338 (498)

Income tax expense (benefit) 128 (209)
------------ ------------

INCOME (LOSS) FROM CONTINUING OPERATIONS 210 (289)

Loss from discontinued operations, net -- (38)
------------ ------------

NET INCOME (LOSS) $ 210 $ (327)
------------ ------------
OTHER COMPREHENSIVE INCOME
Unrealized holding gain on investment arising
during the quarter 19 --
Less: reclassification adjustment for realized
gain included in net income (25) --
------------ ------------

OTHER COMPREHENSIVE INCOME $ (6) --
------------ ------------

COMPREHENSIVE INCOME (LOSS) $ 204 $ (327)
------------ ------------

NET INCOME (LOSS) PER COMMON SHARE
Continuing Operations:
Basic and Diluted $ .03 $ (.04)
Discontinued Operations:
Basic and Diluted $ -- $ (.01)
Net Income (Loss):
Basic and Diluted $ .03 $ (.05)



See notes to condensed consolidated interim financial statements.

5

NORTH AMERICAN GALVANIZING & COATINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited




THREE MONTHS ENDED MARCH 31
============================
(DOLLARS IN THOUSANDS) 2004 2003
===============================================================================

OPERATING ACTIVITIES
Net income (loss) $ 210 $ (327)
Loss from discontinued operations -- 38
Loss from disposal of fixed assets 7 --
Depreciation 684 775
Gain on sale of investment (25) --
Deferred income taxes (8) (258)
Non-cash directors' fee 17 14
Changes in assets and liabilities:
Accounts receivable, net (583) 47
Inventories and other assets (923) (32)
Accounts payable, accrued liabilities and other 363 111
------------ ------------
Net cash provided by (used in) continuing operations (258) 368
Net cash provided by discontinued operations 0 26
------------ ------------
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (258) 394


INVESTING ACTIVITIES
Proceeds from sale of investment 92 --
Capital expenditures (277) (466)
------------ ------------
CASH USED IN INVESTING ACTIVITIES (185) (466)


FINANCING ACTIVITIES
Proceeds from long-term obligations 5,075 4,304
Payments on long-term obligations (4,408) (4,081)
Payment on bonds (157) (150)
------------ ------------
CASH PROVIDED BY FINANCING ACTIVITIES 510 73
------------ ------------

INCREASE IN CASH 67 1

CASH AT BEGINNING OF PERIOD 56 3
------------ ------------

CASH AT END OF PERIOD $ 123 $ 4
============ ============



See notes to condensed consolidated interim financial statements.

6

NORTH AMERICAN GALVANIZING & COATINGS, INC.ANDSUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
UNAUDITED


NOTE 1. BASIS OF PRESENTATION

The condensed consolidated interim financial statements included in this report
have been prepared by North American Galvanizing & Coatings, Inc. (the
"Company") pursuant to its understanding of the rules and regulations of the
Securities and Exchange Commission for interim reporting and include all normal
and recurring adjustments which are, in the opinion of management, necessary for
a fair presentation. The condensed consolidated interim financial statements
include the accounts of the Company and its subsidiary.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted pursuant to such
rules and regulations for interim reporting. The Company believes that the
disclosures are adequate to make the information presented not misleading.
However, these interim financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
Report on Form 10-K, for the year ended December 31, 2003. The financial data
for the interim periods presented may not necessarily reflect the results to be
anticipated for the complete year.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the balance
sheet dates and the reported amounts of revenues and expenses for each of the
years. Actual results will be determined based on the outcome of future events
and could differ from the estimates.

The Company's sole business is hot dip galvanizing and coatings which is
conducted through its wholly owned subsidiary, North American Galvanizing
Company ("NAG").

NOTE 2. STOCK OPTIONS

The Company accounts for its stock option plans in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees",
under which no compensation cost has been recognized for stock option awards.
Had compensation cost for the Company's stock option plans been determined
according to the methodology of Statement of Financial Accounting Standard
No.123, "Accounting for Stock Based Compensation" ("SFAS No. 123"), the
Company's pro forma net earnings (loss) and basic and diluted earnings (loss)
per share for the quarter ended March 31, 2004 and 2003 would have been as
follows:

7


Quarter Ended March 31
- -------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 2004 2003
- -------------------------------------------------------------------------------
Net Income (Loss), as reported $ 210 $ (327)
Deduct: Total stock-based employee compensation
expense determined under fair value based methods,
net of tax $ (6) $ (4)
------- -------

Pro forma net income (loss) $ 204 $ (331)
------- -------
Earnings (loss) per share:
Basic - as reported $ .03 $ (.05)
------- -------
Basic - pro forma $ .03 $ (.05)
------- -------

Diluted - as reported $ .03 $ (.05)
------- -------
Diluted - pro forma $ .03 $ (.05)
------- -------


The fair value of options granted under the Company's stock option plans was
estimated using the Black-Scholes option-pricing model with the following
assumptions used:

Quarter Ended March 31
---------------------------
2004 2003
---------------------------
Volatility 66% 66%
Discount Rate 4% 5%
Dividend Yield 0% 0%
Fair Value $ .90 $ .83

In the first quarter of 2004, the Company issued stock options for 25,000 shares
at $1.70 per share, and issued stock options for 50,000 shares at $1.50 per
share in the first quarter of 2003.

NOTE 3. INCOME (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share for the periods presented are computed
based upon the weighted average number of shares outstanding. Diluted earnings
(loss) per common share for the periods presented are based on the weighted
average shares outstanding, adjusted for the assumed exercise of stock options
and warrants using the treasury stock method. The Company had a net loss for the
three-month period ended March 31, 2003 and the effect of including dilutive
securities in the earnings per common share would have been anti-dilutive.
Accordingly, options to purchase 680,120 common shares were excluded from the
calculation of diluted loss per share for the three-month period ended March 31,
2003.


Three Months Ended March 31 Number of Shares
- --------------------------- ----------------------
2004 2003
--------- ---------
Basic 6,791,996 6,746,133
Diluted 7,484,395 7,426,253

8


The numbers of options excluded from the calculation of diluted earnings per
share, due to the option price being higher than the share market value, are
311,500 and 319,000 at March 31, 2004 and 2003, respectively.

NOTE 4. INVENTORIES

Inventories consist of raw zinc "pigs," molten zinc in galvanizing kettles and
other chemicals and materials used in the galvanizing process. Inventories are
stated at the lower of cost or market with market value based on estimated
realizable value from the galvanizing process. Zinc cost is determined on a
last-in first-out (LIFO) basis. Other inventories are valued primarily on an
average cost basis.

NOTE 5. GOODWILL

The Company ceased amortization of goodwill on January 1, 2002, when it adopted
the provisions of SFAS No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets." In 2003, the Company completed the
annual impairment test of goodwill and concluded goodwill was not impaired. The
Company will complete the annual impairment test of goodwill during the second
quarter of 2004.

NOTE 6. BONDS PAYABLE

In 2000, the Company issued $9,050,000 of Harris County Industrial Development
Corporation Adjustable Rate Industrial Development Bonds, Series 2000 (the
"Bond") for the purchase of land and construction of a hot dip galvanizing plant
in Harris County, Texas. The principal amount outstanding on these bonds was
$7,125,000 at March 31, 2004. The Bonds are senior to other debt of the Company.

The Bonds bear interest at a variable rate (3.5% at March 31, 2004) that can be
converted to a fixed rate upon certain conditions outlined in the bond
agreement. Under the amended Reimbursement Agreement with the bank trustee, the
Company is permitted to withdraw excess interest from the trustee's Interest
Account on or about March 31, June 30, September 30 and December 31 of each
year. In the first quarter of 2004, the Company withdrew excess interest of
$72,000 from the Interest Account and applied the proceeds to pay-down the
outstanding balance on its bank revolving credit facility. At March 31, 2004,
the Company determined that the trustee's interest account held excess interest
in the amount $13,000, which the Company recorded as a current asset.

The Bonds are subject to sinking fund redemption, which was $617,500 in 2003 and
increases annually thereafter to a maximum redemption of $960,000 on June 15,
2012. The Company makes monthly principal and interest payments of approximately
$74,000 into a sinking fund. The final maturity date of the Bonds is June 15,
2013. The Company has the option of early redemption of the Bonds at par unless
the Bonds are converted to a fixed interest rate, in which case they are
redeemable at a premium during a period specified in the bond agreement. The
Company's obligation under the bond agreement is secured through a letter of
credit with a bank which must remain in effect as long as any Bonds are
outstanding. The letter of credit is collateralized by substantially all the
assets of the Company.

9


NOTE 7. SUBORDINATED DEBT

In 2001, the Company completed a $1,000,000 Private Placement of unsecured
subordinated debt. The Company utilized the proceeds to partially fund
construction of a new galvanizing facility in St. Louis, Missouri in 2002. The
amount outstanding on these notes, net of discount, was $960,000 and $942,000 at
March 31, 2004 and 2003, respectively. The notes, which mature February 17, 2006
and bear interest at 10% payable annually, were issued with warrants to purchase
666,666 shares of common stock of the Company. Terms of the warrants, which
expire February 17, 2008, permit the holder to purchase shares of the Company's
common stock at any time prior to the expiration date. The exercise price of
$.856 per share reflects the fair value of the Company's common stock at the
time the warrants were issued, as determined by an independent financial
advisor. As of March 31, 2004 no warrants had been exercised.

NOTE 8. LONG-TERM OBLIGATIONS

March 31 December 31
(Dollars in Thousands) 2004 2003
---------------------- ------------ ------------
Revolving line of credit $ 4,875 $ 3,867
Term loan 1,306 1,567
Construction Loan 2,639 2,722
9.5% note due 2015 20 20
------------ ------------

$ 8,840 $ 8,176
Less current portion (1,410) (1,408)
------------ ------------
$ 7,430 $ 6,768
------------ ------------

In September 2003, the Company amended a three-year bank credit agreement that
was scheduled to expire in June 2004 and extended its maturity to January 1,
2005. Subject to borrowing base limitations, the amended agreement provides (i)
a $7,000,000 maximum revolving credit facility for working capital and general
corporate purposes, (ii) a $1,911,924 term note and (iii) a $2,833,332
construction note.

Term loan payments are based on a three-year amortization schedule with equal
monthly payments of principal and interest, and the loan may be prepaid without
penalty. The revolving line of credit may be paid down without penalty, or
additional funds may be borrowed up to the maximum line of credit. At March 31,
2004, the Company had borrowed the maximum available under the line of credit,
based on the underlying borrowing base of accounts receivable and inventory.
Payments on the construction loan are based on a 108-month amortization
schedule, plus interest, that commenced March 1, 2003, and the loan may be
prepaid without penalty.

At March 31, 2004, $8,820,000 was outstanding under the bank credit agreement,
and $400,000 was reserved for outstanding irrevocable letters of credit to
secure payment of current and future workers' compensation claims.

10


Substantially all of the Company's accounts receivable, inventories, fixed
assets and the common stock of its subsidiary are pledged as collateral under
the agreement, and the credit agreement is secured by a full and unconditional
guaranty from NAG. Amounts borrowed under the agreement bear interest at the
prime rate of Bank One, Oklahoma or the LIBOR rate, at the option of the
Company, subject to a rate margin adjustment determined by the Company's
consolidated debt service coverage ratio. In the event the Company fails to
maintain a consolidated debt service coverage ratio for any fiscal quarter of at
least 1.25 to 1.00, the Applicable LIBOR Rate Margin will be increased to 5.75%
and the Applicable Prime Rate Margin will be increased to 3.00%. Thereafter, the
increased rate margin will remain in effect until such time as the Company has
maintained a consolidated debt service coverage ratio greater than or equal to
1.25 to 1.00 for a subsequent fiscal quarter.

In the event the Company fails to maintain a consolidated EBITDA to capital
expenditures plus current maturity of long-term debt ratio for any fiscal
quarter of not less than 1.00 to 1.00, the increase in the Applicable LIBOR Rate
Margin ranges from 3.75% to 5.75%, and the increase in the Applicable Prime Rate
Margin ranges from 1.00% to 3.00%.

The credit agreement requires the Company to maintain compliance with covenant
limits for current ratio, debt to tangible net worth ratio, debt service
coverage ratio and a capital expenditures ratio. The Company was in compliance
with the covenants at March 31, 2004.

NOTE 9. COMMITMENTS AND CONTINGENCIES

The Company has commitments with domestic and foreign zinc producers and brokers
to purchase zinc used in its hot dip galvanizing operations. Commitments for the
future delivery of zinc reflect rates then quoted on the London Metals Exchange
and are not subject to price adjustment or are based on such quoted prices at
the time of delivery. At March 31, 2004 the aggregate commitments for the
procurement of zinc at fixed prices were approximately $4.0 million. The Company
reviews these fixed price contracts for losses using the same methodology
employed to estimate the market value of its zinc inventory. The Company had
unpriced commitments for the purchase of approximately 1.1 million pounds of
zinc at March 31, 2004.

The Company's financial strategy includes evaluating the selective use of
derivative financial instruments to manage zinc and interest costs. As part of
its inventory management strategy, the Company expects to continue evaluating
hedging instruments to minimize the impact of zinc price fluctuations. The
Company had no derivative instruments required to be reported at fair value at
March 31, 2004 or December 31, 2003, and did not utilize derivatives in the
quarter ended March 31, 2004 or the year ended December 31, 2003, except for
those forward purchase agreements, which are accounted for as normal purchases.

The Company's total off-balance sheet contractual obligations at March 31, 2004,
consist of $2,328,000 for long-term operating leases for two galvanizing
facilities and galvanizing equipment and approximately $4,000,000 for zinc
purchase commitments. The various leases for galvanizing facilities, including
option renewals, expire from 2015 to 2017. A lease for galvanizing equipment
expires in 2007.

11


NAG was notified in 1997 by the Illinois Environmental Protection Agency
("IEPA") that it was a potentially responsible party under the Comprehensive
Environmental Response, Compensation, and Liability Information System
("CERCLIS") in connection with cleanup of an abandoned site formerly owned by
Sandoval Zinc Co. The IEPA notice includes NAG as one of 59 organizations which
arranged for the treatment and disposal of hazardous substances at Sandoval.
Based on current information and the preliminary state of investigation, NAG's
share of any probable future costs cannot be estimated at this time.

The Company will continue to have additional environmental compliance costs
associated with operations in the galvanizing business. The Company is committed
to complying with the environmental legislation and regulations affecting its
operations. Due to the uncertainties associated with future environmental
technologies, regulatory interpretations, and prospective legislative activity,
management cannot reasonably quantify the Company's potential future costs in
this area.

The Company expenses or capitalizes, where appropriate, environmental
expenditures that relate to current operations as they are incurred. Such
expenditures are expensed when they are attributable to past operations and are
not expected to contribute to current or future revenue generation. The Company
records liabilities when remediation or other environmental assessment or
clean-up efforts are probable and the cost can be reasonably estimated.

Various litigation arising in the ordinary course of business is pending against
the Company. Management believes that resolution of the Company's litigation and
environmental matters should not materially affect the Company's consolidated
financial position or liquidity. Should future developments cause the Company to
record an additional liability for environmental matters, litigation or customer
claims, the recording of such a liability could have a material impact on the
results of operations for the period involved.

NOTE 10. TREASURY STOCK

In the first quarter of 2004, the Company issued 11,206 shares of its common
stock from Treasury to outside Directors of the Company as payment for their
quarterly board fee in lieu of cash payments. The shares were valued at the
average closing price of North American Galvanizing & Coatings, Inc. common
stock for a prior 30-day period, as reported by the American Stock Exchange.
Such shares were issued pursuant to the Directors' prior election and notice to
the Company to receive up to all of their 2004 quarterly board fees in the
Company's stock in lieu of cash. During 2003, the Company issued 46,218 shares
for such purpose.

NOTE 11. DISCONTINUED OPERATIONS

In the first quarter ended March 31, 2003, the Company recorded a net loss from
a discontinued operation of $38,000, net of taxes of $27,000. The Company
wrote-off its investment in the formerly idled Houston-Cunningham galvanizing
plant in the second quarter ended June 30, 2003 as a discontinued operation. In
2002, the Board of

12


Directors authorized the Company to pursue alternative uses for the
Houston-Cunningham plant, which was temporarily idled in late 2001. Management
believed the carrying value of the plant and the related galvanizing assets
would be realized through future operations of the plant. Accordingly, no
write-down was recognized in 2002. However, in late April 2003, new events,
combined with a further contraction of the galvanizing business in the Houston
market, resulted in the likely inability to maintain the plant as part of the
Company's continuing operations. The write-off resulted in a net loss on the
abandoned assets of $754,000, net of taxes of $443,000, in the second quarter of
2003.

NOTE 12. BUSINESS DEVELOPMENT

As reported previously, the lease term of a galvanizing facility occupied by one
of NAG's subsidiaries expired July 31, 2003, and has not been renewed. NAG has
exercised an option to purchase the facility, and the landlord is contesting the
Company's right to exercise this option. NAG has filed a lawsuit against the
landlord seeing enforcement of the right to exercise the option. The litigation
is in the discovery stage and management expects there will be no disruption to
its galvanizing business being conducted at the facility.


















13


NORTH AMERICAN GALVANIZING & COATINGS, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

North American Galvanizing is a leading provider of corrosion protection for
iron and steel components fabricated by its customers. Based on the number of
its operating plants, the Company is one of the largest merchant market hot dip
galvanizing companies in the United States. Hot dip galvanizing is the process
of applying a zinc coating to fabricated iron or steel material by immersing the
material in a bath consisting primarily of molten zinc.

During the quarter ended March 31, 2004, there were no significant changes to
the Company's critical accounting policies previously disclosed in Form 10-K.

The Company's galvanizing plants offer a broad line of services including
centrifuge galvanizing for small threaded products, sandblasting, chromate
quenching, polymeric coatings, and proprietary INFRASHIELDSM Coating Application
Systems for polyurethane protective linings and coatings over galvanized
surfaces. The Company's structural and chemical engineers provide customized
assistance with initial fabrication design, project estimates and steel
chemistry selection.

The Company's galvanizing and coating operations are managed through two regions
with ten (10) facilities located in Colorado, Kentucky, Missouri, Oklahoma,
Tennessee and Texas. These facilities operate galvanizing kettles ranging in
length from 30 feet to 62 feet, and have lifting capacities ranging from 12,000
pounds to 40,000 pounds.

The Company maintains a sales and service network coupled with its galvanizing
plants, supplemented by national account business development at the corporate
level. In a typical year, the Company will galvanize in excess of 300,000,000
pounds of steel products for approximately 1,800 customers nationwide.

All of the Company's sales are generated for domestic customers whose end
markets are principally in the United States. The Company markets its
galvanizing and coating services directly to its customers and does not utilize
agents or distributors. Although hot dip galvanizing is considered a mature
service industry, the Company is actively engaged in developing new markets
through participation in industry trade shows, metals trade associations and
presentation of technical seminars by its national marketing service team.

Hot dip galvanizing provides metals corrosion protection for many product
applications used in commercial, construction and industrial markets. The
Company's galvanizing can be found in almost every major application and
industry that requires corrosion protection where iron or steel is used,
including the following end user markets:

o highway and transportation,
o power transmission and distribution,
o wireless and telecommunications,

14


o utilities,
o petrochemical processing,
o infrastructure including buildings, airports, bridges and power generation
o industrial grating,
o wastewater treatment; fresh water storage and transportation
o pulp and paper,
o pipe and tube,
o food processing,
o agricultural (irrigation systems)
o recreation (boat trailers, marine docks, stadium scaffolds)
o original equipment manufactured products, including general fabrication

As a value-added service provider, the Company's revenues are directly
influenced by the level of economic activity in the various end markets that it
serves. Economic activity in those markets that results in the expansion and/or
upgrading of physical facilities (i.e., construction) may involve a time-lag
factor of several months before translating into a demand for galvanizing
fabricated components. Despite the inherent seasonality associated with large
project construction work, the Company maintains a relatively stable revenue
stream throughout the year by offering fabricators, large and small, reliable
and rapid turn-around service. The Company records revenues when the galvanizing
and customer billing processes are completed. The Company generates all of its
operating cash from such revenues, and utilizes a line of credit secured by the
underlying accounts receivable and zinc inventory to facilitate working capital
needs.

Each of the Company's galvanizing plants operate in a highly competitive
environment underscored by pricing pressures, primarily from other public and
privately-owned galvanizers and alternative forms of corrosion protection, such
as paint. The Company's long-term response to these challenges has been a
sustained strategy focusing on providing a reliable quality of galvanizing to
industry ASTM specifications and rapid turn-around time on every project, large
and small. Key to the success of this strategy is the Company's continuing
commitment and long-term record of reinvesting earnings to upgrade its
galvanizing facilities and provide technical innovations to improve production
efficiencies; and to construct new facilities when market conditions present
opportunities for growth. The Company is addressing long-term opportunities to
expand its galvanizing and coatings business through programs to increase
industry awareness of the proven, unique benefits of galvanizing for metals
corrosion protection. Each of the Company's independently operated galvanizing
plants is linked to a centralized control system involving sales order entry,
facility maintenance and operating procedures, quality assurance, purchasing and
credit and accounting that enable the plant to focus on providing galvanizing
and coating services in the most cost-effective manner.

The principal raw materials essential to the Company's galvanizing and coating
operations are zinc and various chemicals which are normally available for
purchase in the open market.

15


KEY INDICATORS

Key industries which historically have provided the Company some indication of
the potential demand for galvanizing in the near-term, (i.e., primarily within a
year) include highway and transportation, power transmission and distribution,
telecommunications and the level of quoting activity for regional metal
fabricators. In general, growth in the commercial/industrial sectors of the
economy generates new construction and capital spending which ultimately impacts
the demand for galvanizing.

Key operating measures utilized by the Company include new orders, zinc
inventory, tons of steel galvanized, revenue, pounds and labor costs per hour,
zinc usage related to tonnage galvanized, and lost-time safety performance.
These measures are reported and analyzed on various cycles, including daily,
weekly and monthly.

The Company utilizes a number of key financial measures to evaluate the
operations at each of its galvanizing plants, to identify trends and variables
impacting operating productivity and current and future business results, which
include: sales, gross profit, fixed and variable costs, selling and general
administrative expenses, operating cash flows, capital expenditures, interest
expense, and a number of ratios such as profit from operations and accounts
receivable turnover. These measures are reviewed by the Company's operating and
executive management monthly, or more frequently, and compared to prior periods,
the current business plan and to standard performance criteria, as applicable.

RESULTS OF OPERATIONS

The following table shows the Company's results of operations for the quarters
ended March 31, 2004, 2003 and 2002:

QUARTERS ENDED MARCH 31
--------------------------------------------------------------------------------
2004 2003 2002
---------------------- ---------------------- ----------------------
(DOLLARS IN THOUSANDS) AMOUNT % OF SALES AMOUNT % OF SALES AMOUNT % OF SALES
- --------------------- ------ ---------- ------ ---------- ------ ----------

Sales $ 8,558 100.0% $ 8,040 100.0% $ 9,217 100.0%
Cost of sales 6,005 70.2% 6,003 74.7% 6,305 68.4%
------- ----- ------- ----- ------- -----

Gross profit 2,553 29.8% 2,037 25.3% 2,912 31.6%
Selling, general & administrative expenses 1,395 16.3% 1,452 18.1% 1,319 14.3%
Depreciation and amortization 684 8.0% 775 9.6% 606 6.6%
------- ----- ------- ----- ------- -----

Operating income (loss) 474 5.5% (190) (2.4)% 987 10.7%
Interest expense, net 161 1.9% 308 3.8% 287 3.1%
Other (income), net (25) (0.3)% -- -- -- --
------- ----- ------- ----- ------- -----

Income (loss) from continuing operations
before income taxes 338 3.9% (498) (6.2)% 700 7.6%
Income tax expense (benefit) 128 1.5% (209) (2.6)% 267 2.9%
------- ----- ------- ----- ------- -----

Income (loss) from continuing operations
before effect of discontinued operations 210 2.4% (289) (3.6)% 433 4.7%
Income (loss) from discontinued operations -- -- (38) (0.5%) (209) (2.3)%
------- ----- ------- ----- ------- -----
Net Income (Loss) $ 210 2.4% $ (327) (4.1)% $ 224 2.4%
======= ===== ======= ===== ======= =====


16


KEY DEVELOPMENTS. During the period 2001 through 2003, the Company reported a
number of developments supporting its strategic program to reposition its
galvanizing business in the national market.

The Company's new St. Louis galvanizing plant completed its first full year of
operations in 2003 with a 71% increase in tonnage over the smaller plant that it
replaced. This larger, new facility is providing NAG a strategic base for
extending its geographic area of service. A 51-foot kettle at this new facility
provides the largest galvanizing capacity in the St. Louis region.

In January 2003, the Company expanded services at its Nashville galvanizing
plant with the installation of a state-of-the-art Spinner line to galvanize
small products, including bolts and threaded material.

As reported previously, the Company wrote-off its investment in the formerly
idled Houston-Cunningham galvanizing plant in the second quarter ended June 30,
2003. The write-off resulted in a net loss on the abandoned assets of $754,000,
net of taxes of $443,000 in 2003. The net loss from operations for the
Cunningham plant was $77,000 and $205,000, net of taxes of $45,000 and $133,000,
for the years ended December 31, 2003 and 2002, respectively. The abandoned
Cunningham plant has been classified as a discontinued operation and its
expenses are not included in the results of continuing operations discussed
below.

In the third quarter of 2002, the Company announced the introduction of
INFRASHIELDSM Coating, a specialty polymer coating system that is designed to be
applied over hot dip galvanized material slated for harsh operating conditions.
The INFRASHIELDSM coating technology results in superior corrosion protection by
combining cathodic protection with a non-conductive coating.

In the first quarter of 2001, NAG began operations at its newly-constructed
galvanizing facility in Houston, Texas. The Fairbanks plant -- approximately
55,000 square feet under roof -- features a state-of-the-art galvanizing process
line, with 40,000 pound lifting capacity supporting a massive 62-foot zinc
dipping kettle. The plant started operations supported by a multi-year contract
to galvanize large wireless communication and electric transmission poles for a
major company. In addition to conventional hot dip galvanizing, the Fairbanks
plant offers its customers grit blasting and etching for pre-paint coatings,
polymeric coating and INFRASHIELDSM coating application systems in a dedicated
facility at this same site.

2004 COMPARED TO 2003

SALES. North American Galvanizing's sales for the quarter ended March 31, 2004
were $8,558,000, an increase of 6.4% over sales of $8,040,000 for the same
period in 2003. Total production volume in the first quarter of 2004 increased
6.0% over the first quarter of 2003, reflecting modest increases in capital
goods spending and construction related demand for galvanizing. Slightly
stronger average selling prices, primarily due to product mix, also contributed
to increased sales revenue in the first quarter of 2004. In 2003, the lower
demand for galvanizing due to weaknesses in the economy adversely impacted

17


North American Galvanizing's sales. Over the course of 2003, we lowered our
operating break-even cost structure and as the capital goods spending segment of
the economy recovers, as experienced in the first quarter of 2004, we expect the
demand for galvanizing should gradually be reflected in higher sales and
improved operating results for the Company.

GROSS PROFIT. Gross profit for the first quarter of 2004 increased 25.3% to
$2,553,000, compared to $2,037,000 in the first quarter of 2003. Gross profit as
a percentage of sales increased to 29.8% from 25.3% in 2003, primarily due to
higher production volume and an improved operating cost structure. Improved
gross profit margins in the first quarter of 2004, as compared to the first
quarter of 2003, reflect the contributions from increased production volume to
cover fixed costs, lower costs for insurance and natural gas, plus improved
labor efficiency. Despite the highly competitive environment for galvanizing,
the Company expects the improved gross profit margins achieved in the
first-quarter of 2004 can be sustained, provided demand for galvanizing does not
abate.

DEPRECIATION EXPENSE. Depreciation expense for the first quarter of 2004 was
$684,000, compared to $775,000 for the same period a year ago. The decrease in
depreciation expense for 2004 is due to significant assets becoming fully
depreciated in 2003 and late 2002.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES. SG&A decreased 3.9% to
$1,395,000 in the first quarter of 2004, from $1,452,000 in 2003. The decrease
primarily reflects lower costs of insurance premiums of $58,000, lower sales and
administrative salary expense of $39,000, which were partially offset by
increased fees for legal services of $46,000. The Company anticipates its 2004
insurance costs will continue to compare favorably with 2003 due to a
restructuring of its insurance program, but travel expenses are expected to
increase in support of the Company's sales and marketing programs. In addition
to sales and service support teams assigned to each of its regional galvanizing
plants, NAG is committing corporate-level marketing resources to expand and
develop new national account business.

INTEREST EXPENSE. Interest expense for the first quarter of 2004 decreased by
$147,000 to $161,000. A number of factors contributed to the $147,000 reduction
in interest expense: lower average borrowings for working capital; lower average
interest rates on variable rate debt; reduction in term loan balances and lower
fees for letters of credit. Variable rate debt decreased from 4.5% to 4.25% as a
result of changes in the prime rate. The Company's average outstanding line of
credit borrowings for the first quarter of 2004 were $3,129,000 compared to
$4,035,000 for 2003. Interest expense also decreased due to a lower interest
rate on the Company's industrial revenue bonds. In September 2003, the Company
amended the bond agreement to more nearly reflect the interest rate earned by
the bondholders. The amendment provides that the bond trustee will evaluate the
interest account at the end of each calendar quarter and refund the excess
amount determined, if any, and rebate such excess to the Company. The Company
has elected to apply any such rebates to offset the cost of a letter of credit
related to the industrial revenue bonds. In the first quarter of 2004, the
Company was refunded excess bond interest of $41,000. There was no comparable
recognition of excess bond interest in the first quarter of 2003. The Company's
interest expense for the first quarter of 2004 was not impacted by inflation.

18


OTHER (INCOME), NET. In the first quarter of 2004, the Company liquidated its
total investment in equity securities and realized a gain of $25,000.

INCOME TAXES. The Company's effective income tax rates, including taxes related
to discontinued operations in 2003, for the first quarters of 2004 and 2003 were
37.9% and 41.9%, respectively. The rate for 2003 differed from the federal
statutory rate primarily due to state income taxes and adjustments to the
estimate of the deferred tax asset accounts. The rate for 2004 differed
primarily from the federal statutory rate due to state income taxes.

DISCONTINUED OPERATIONS. NET (LOSS). In the first quarter ended March 31, 2003,
the Company recorded a net loss from a discontinued operation of $38,000, net of
taxes of $27,000. See Note 11, Discontinued Operations, Notes to Condensed
Consolidated Interim Financial Statements.

2003 COMPARED TO 2002

SALES. Sales for the first quarter of 2003 were $8,040,000, a decrease of
$1,177,000, or 12.8% from sales of $9,217,000 in the first quarter of 2002.
Total production volume, measured by tons of steel galvanized, declined 14.3%
from the prior year. The continued weakness in the domestic economy negatively
affected North American Galvanizing's galvanizing and coatings business in the
first quarter of 2003. Orders from fabricators serving major industries, such as
Electrical Transmission, Communications, Highway and Petro-Chemical, all
declined compared to last year. Underlying production volume at the Company's
galvanizing facilities varied significantly by region. Despite aggressive
pricing from competing galvanizers, North American Galvanizing maintained stable
average selling prices during the first quarter of 2003, and recorded a slight
improvement in average pricing over the first quarter of 2002.

GROSS PROFIT. Gross profit of $2,037,000 for the first quarter of 2003 was down
30% from gross profit of $2,912,000 for the first quarter of 2002, reflecting
sharply lower sales and increased operating costs. For the first quarter of
2003, the Company reported an operating loss, before interest expense and taxes,
of $190,000 compared to operating income of $987,000 in the first quarter of
2002. The decline in operating income was primarily due to lower order volume,
higher utility costs for natural gas, and increased premiums for property,
liability and worker's compensation insurance coverages, that affected cost of
sales. Natural gas costs, which typically represent 5% of North American
Galvanizing's cost of sales, increased 105% over the first quarter of 2002,
reflecting increased market prices. Insurance premium costs for the first
quarter of 2003 increased approximately 54% over the prior year, reflecting both
increased market pricing for all lines of property and liability coverage and
the impact of prior claims incurred in the galvanizing operation.

DEPRECIATION EXPENSE. Depreciation expense for the first quarter of 2003 was
$823,000 compared to $805,000 for the same period of 2002.

19


SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSE. The Company's SG&A expense
of $1,452,000 for the first quarter of 2003 increased 10.1%% from $1,319,000 for
the first quarter of 2002, primarily reflecting increases in direct selling and
marketing expenses and insurance premiums.

INTEREST EXPENSE. The Company's net interest expense for the first quarter of
2003 was $308,000 compared to $287,000 for the first quarter of 2002, reflecting
financing costs for construction of a new galvanizing plant in St. Louis,
Missouri, which began operating in December 2002.

INCOME TAXES. The Company estimated its effective income tax rate in the first
quarter of 2003 at 42%, which compared to an estimated tax rate of 38% used for
the first quarter of 2002. The higher tax rate used in the first quarter of 2003
reflected adjustments to the deferred tax accounts made during first quarter
2003.

DISCONTINUED OPERATIONS. For the first quarter of 2003 and 2002, the Company
record a net loss from a discontinued operation, net of taxes, of $38,000 and
$209,000, respectively. See Note11, Discontinued Operations, Notes to Condensed
Consolidated Interim Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash flow from operations has consistently been adequate to fund
its working capital and current facilities' capital spending requirements.
During the three years ended March 31, 2004, operating cash flow has been the
primary source of liquidity, supplemented by funds from issuance of a private
placement of notes and a term loan to finance a new galvanizing plant. The
Company monitors working capital and planned capital spending to assess
liquidity and minimize cyclical cash flow.

The Company used $258,000 for operating activities in the first quarter of 2004,
compared to providing cash of $394,000 in the same quarter a year ago. The
decrease in first-quarter 2004 cash flow from operations was due to increases in
working capital to support increased sales revenue, partially offset by the
increase in net income.

The Company anticipates that it will be able to satisfy cash requirements for
its ongoing business operations for the foreseeable future with cash generated
by operations and borrowings under its existing credit facilities.

Cash of $185,000 used in investing activities in the first quarter of 2004
consisted of capital expenditures of $277,000 to maintain galvanizing
facilities, offset by proceeds of $92,000 from the sale of investment
securities. Capital expenditures of $466,000 in the first quarter of 2003
included budgeted capital programs to upgrade existing galvanizing facilities
and for the completion of a new galvanizing plant in St. Louis, Missouri. For
the remainder of 2004, expected capital expenditures of approximately $1,100,000
are budgeted for the Company's existing galvanizing facilities.

In the first quarter of 2004, the Company's total debt (current and long-term
obligations) increased $510,000 to $16,925,000. Financing activities in the
first quarter of 2004 included payments of $157,000 to a bond sinking fund,
payments of $351,000 on bank term loans and other obligations and proceeds of
$1,018,000 from a bank line of credit.

20


In the first quarter of 2004, the Company issued 11,206 shares of its common
stock from treasury in lieu of cash for payment of board fees to its directors.

In September 2003, the Company amended a three-year bank credit agreement that
was scheduled to expire in June 2004 and extended its maturity to January 1,
2005. Subject to borrowing base limitations, the amended agreement provides (i)
a $7,000,000 maximum revolving credit facility for working capital and general
corporate purposes, (ii) a $1,911,924 term note and (iii) a $2,833,332 advancing
construction note. On May 11, 2004, the bank extended the maturities under this
credit agreement to April 1, 2005 and informed the Company that they will likely
extend the maturities beyond that date during the second quarter of 2004.

At March 31, 2004, $8,820,000 was outstanding under the bank credit agreement,
and $400,000 was reserved for outstanding irrevocable letters of credit for
workers' compensation insurance coverage. The Company's commitment to repay
$9,050,000 of tax-exempt adjustable rate industrial revenue bonds issued in 2000
is fully secured by an

irrevocable letter of credit issued by Bank One, Oklahoma, N.A. in favor of Bank
One Trust Company (See Note 6 to Consolidated Financial Statements). At March
31, 2004, the Company had fully utilized the available borrowing capacity, net
of outstanding letters of credit, under its revolving line of credit based on
the borrowing base calculated under the agreement. Available borrowing capacity
under the revolving line of credit improved to $406,000 at the end of April and
the Company expects additional borrowing capacity will be restored as peak-level
zinc inventories are absorbed through the galvanizing process. The Company
believes that its ability to continue to generate cash from operations and its
bank credit facilities will provide adequate capital resources and liquidity to
support operations and capital expenditures plans for 2004.

The Company has various commitments primarily related to long-term debt,
industrial revenue bonds, operating lease commitments, zinc purchase commitments
and vehicle operating leases. The Company's off-balance sheet contractual
obligations at March 31, 2004, consist of $1,981,000 for long-term operating
leases for two galvanizing facilities and galvanizing equipment, $346,000 for
vehicle operating leases and $4,000,000 for zinc purchase commitments. The
various leases for galvanizing facilities, including option renewals, expire
from 2015 to 2017. A lease for galvanizing equipment expires in 2007. The
vehicle leases expire annually on various schedules through 2008. NAG
periodically enters into fixed price purchase commitments with domestic and
foreign zinc producers to purchase a portion of its requirements for its hot dip
galvanizing operations; commitments for the future delivery of zinc are
typically up to one year.





21


The Company expects to fund these commitments with cash generated from
operations and continuation of existing bank credit agreements as they mature.
The Company's contractual obligations and commercial commitments as of March 31,
2004 are as follows (in thousands):

PAYMENT DUE OR COMMITMENT EXPIRATION BY PERIOD
---------------------------------------------------------------------------------------
TOTAL 2004 2005 2006 2007 2008 5 YEARS
-------- -------- -------- -------- -------- -------- --------

Industrial revenue bonds $ 7,125 $ 499 $ 693 $ 731 $ 767 $ 806 $ 3,629

Long-term debt 8,820 1,038 7,764 1 1 1 15

Subordinated notes 1,000 -- -- 1,000 -- -- --

Facilities operating leases 1,981 373 491 411 379 36 291

Vehicle operating leases 356 100 95 70 54 37 --

Zinc purchase commitments 4,000 4,000 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total contractual cash
obligations $ 23,282 $ 6,010 $ 9,043 $ 2,213 $ 1,201 $ 880 $ 3,935
======== ======== ======== ======== ======== ======== ========

Other contingent commitments:
Letters of credit* $ 7,525 $ 899 $ 693 $ 731 $ 767 $ 806 $ 3,629


*Amount includes letter of credit relating to debt outstanding under the
industrial revenue bond agreement (See Note 6 to Condensed Consolidated Interim
Financial Statements).


ENVIRONMENTAL MATTERS

The Company's facilities are subject to extensive environmental legislation and
regulations affecting their operations and the discharge of wastes. The cost of
compliance with such regulations in the first quarter of 2004 and 2003 was
approximately $228,000 and $269,000,respectively, for the disposal and recycling
of wastes generated by the galvanizing operations.

As previously reported, North American Galvanizing was notified in 1997 by the
Illinois Environmental Protection Agency ("IEPA") that it was a potentially
responsible party under the Comprehensive Environmental Response, Compensation,
and Liability Information System ("CERCLIS") in connection with cleanup of an
abandoned site formerly owned by Sandoval Zinc Co. The IEPA notice includes
North American Galvanizing as one of 59 organizations which arranged for the
treatment and disposal of hazardous substances at Sandoval. Based on current
information and the preliminary state of investigation, North American
Galvanizing's share of any probable future costs cannot be estimated at this
time.

The Company is committed to complying with all federal, state and local
environmental laws and regulations and using its best management practices to
anticipate and satisfy future requirements. As is typical in the galvanizing
business, the Company will have additional environmental compliance costs
associated with past, present, and future

22


operations. Management is committed to discovering and eliminating environmental
issues as they arise. Because of the frequent changes in environmental
technology, laws and regulations management cannot reasonably quantify the
Company's potential future costs in this area.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's operations include managing market risks related to changes in
interest rates and zinc commodity prices.

INTEREST RATE RISK. The Company is exposed to financial market risk related to
changes in interest rates. Changing interest rates will affect interest paid on
the Company's variable rate debt. At March 31, 2004, the Company's outstanding
debt of $16,925,000, net of a $40,000 discount, consisted of the following:
Variable rate debt aggregating $8,820,000 under the bank credit agreement, with
an effective rate of 4.2%; $7,125,000 under the industrial revenue bond
agreement, with an effective rate of 3.5%; and, fixed rate debt consisting of
$1,000,000 of 10% subordinated promissory notes and a 9.5% term note of $20,000.
The borrowings under all of the Company's debt obligations at March 31, 2004 are
due as follows: $1,537,000 in 2004; $8,457,000 in 2005; $1,732,000 in 2006 and
$5,219,000 in years 2007 through 2013. Each increase of 10 basis points in the
effective interest rate would result in an annual increase in interest charges
on variable rate debt of approximately $15,900 based on March 31, 2004
outstanding borrowings. The actual effect of changes in interest rates is
dependent on actual amounts outstanding under the various loan agreements. The
Company monitors interest rates and has sufficient flexibility to renegotiate
the loan agreement, without penalty, in the event market conditions and interest
rates change.

ZINC PRICE RISK. NAG periodically enters into fixed price purchase commitments
with domestic and foreign zinc producers to purchase a portion of its zinc
requirements for its hot dip galvanizing operations. Commitments for the future
delivery of zinc, typically up to one (1) year, reflect rates quoted on the
London Metals Exchange. At March 31, 2004, the aggregate fixed price commitments
for the procurement of zinc was approximately $4,000,000. With respect to these
zinc fixed price purchase commitments, a hypothetical decrease of 10% in the
market price of zinc from the March 31, 2004 level represented a potential lost
gross margin opportunity of approximately $400,000; however, lower zinc prices
potentially could benefit future earnings for the zinc purchases that are made
at the lower market price.

The Company's financial strategy includes evaluating the selective use of
derivative financial instruments to manage zinc and interest costs. As part of
its inventory management strategy, the Company recognizes that hedging
instruments may be effective in minimizing the impact of zinc price
fluctuations. The Company's current zinc forward purchase commitments (See Note
9) are considered derivatives, but the Company has elected to account for these
purchase commitments as normal purchases.

23


ITEM 4. CONTROLS AND PROCEDURES

The certifying officers of the Company are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the Company and have i) designed such disclosure controls
and procedures to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to them by others within
those entities, particularly during the period in which this quarterly report is
being prepared; and ii) evaluated the effectiveness of the Company's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"). Based on this evaluation, the
chief executive officer and the chief financial officer of the Company have
concluded that the Company's disclosure controls and procedures were effective
during the quarter being reported on in this quarterly report.

The Company's certifying officers have indicated that there were no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of their most recent evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.



















24


PART II OTHER INFORMATION

Item 1. Legal Proceedings - Not applicable.

Item 2. Changes in Securities and Use of Proceeds - Not applicable.

Item 3. Defaults Upon Senior Securities - Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders - Not applicable.

Item 5. Other Information - Not applicable.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

3.1 The Company's Restated Certificate of Incorporation (incorporated
by reference to Exhibit 3.1 to the Company's Pre-Effective
Amendment No. 1 to Registration Statement on Form S-3 (Reg.
No. 333-4937) file on June 7, 1996).

3.2 The Company's Amended and Restated Bylaws (incorporated by
reference to Exhibit 3.2 to the Company's Quarterly Report on
Form 10-Q dated March 31, 1996).

31 Certifications pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.

32 Certifications pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99 Cautionary Statements by the Company Related to Forward-Looking
Statements.

(b) Reports on Form 8-K

Filed February 9, 2004: Resignation of Outside Director, Mark E. Walker.
Filed February 17, 2004: Year 2003 Earnings Announcement.



25


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:



NORTH AMERICAN GALVANIZING & COATINGS, INC.
(Registrant)




/s/ Paul R. Chastain
----------------------------------
Vice President and
Chief Financial Officer
(Principal Financial Officer)

Date: May 14, 2004



















26