NORTHWEST PIPE COMPANY

PRO FORMA CONDENSED COMBINED BALANCE SHEET

(Unaudited)

June 30, 2018

(In thousands)

NORTHWEST PIPE COMPANY

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(Unaudited)

For the Six Months Ended June 30, 2018

(In thousands, except per share amounts)

NORTHWEST PIPE COMPANY

PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(Unaudited)

For the Year Ended December 31, 2017

(In thousands, except per share amounts)

1.

Basis of Presentation

2.

Preliminary Purchase Price Allocation

3.

Reclassification Adjustments

(1)

The Company recognizes accrued customer claims in Trade receivables, net, while Ameron recognizes these amounts in Accrued liabilities. Therefore, this reclassification adjustment conforms the presentation of accrued customer claims to the Company’s presentation.

(2)

Ameron’s Accounts payable, related party is a payable to its former parent company. Therefore, this reclassification adjustment reflects this as a trade payable for the Company.

(3)

The Company recognizes scrap sales in Net sales, while Ameron recognizes these revenues as a reduction to Cost of sales. Therefore, this reclassification adjustment conforms the presentation of scrap sales to the Company’s presentation.

(4)

The Company recognizes certain costs in Cost of sales, while Ameron recognizes these costs in Selling, general and administrative expense. Therefore, this reclassification adjustment conforms the presentation of these costs to the Company’s presentation.

(5)

Reflects a reclassification adjustment for the impact of the adoption of Accounting Standards Update No. 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” to present the Company’s non-service components of periodic pension cost in “Other income (expense)” in the pro forma condensed combined statements of operations.

4.

Pro Forma Adjustments

(a)

Reflects consideration of $38.3 million of cash paid at closing of acquisition.

(b)

Represents the payment of the estimated transaction costs of $1.9 million related to the Ameron acquisition. As acquisition-related transactions costs are non-recurring items, an adjustment totaling $0.1 million has been reflected in the unaudited pro forma condensed combined statement of operations to remove the acquisition-related transaction costs that were expensed by the Company during the six months ended June 30, 2018.

(c)

Reflects the adjustment to conform Ameron’s historical financial statements with the Company's accounting policy to recognize revenue over time as the manufacturing process progresses. Historically, Ameron has recognized revenues at the time its manufacturing process is complete, the customer has been provided with all proper inspection and other required documentation, title and risk of loss has passed to the customer, collectability is reasonably assured and the product has been delivered.

(d)

Reflects the adjustment of historical intangible assets acquired by the Company to their estimated fair values. As part of the preliminary valuation analysis, the Company identified intangible assets for backlog. The fair value of identifiable intangible assets is determined primarily using the income approach, which requires a forecast of all of the expected future cash flows. Since all information required to perform a detailed valuation analysis of Ameron’s intangible assets could not be obtained as of the date of this filing, for purposes of these unaudited pro forma condensed combined financial statements, the Company used certain assumptions based on publicly available transaction data for the industry.

(e)

Reflects the adjustment of $21.1 million to increase the basis in the acquired property and equipment to estimated fair value of $34.9 million. The estimated useful lives range from 1 to 35 years. The fair value and useful life calculations are preliminary and subject to change after the Company finalizes its review of the specific types, nature, age, condition and location of Ameron’s property and equipment.

(f)

Reflects the adjustment to current income taxes payable and deferred income tax liabilities resulting from the expected current and future income tax consequences of temporary differences between the fair values of the assets acquired and liabilities assumed and their tax bases. This estimate of income tax balances is preliminary and subject to change based on management’s final determination of the fair value of assets acquired and liabilities assumed by jurisdiction.

(g)

Represents the elimination of the historical equity of Ameron.

(h)

Represents preliminary bargain purchase gain, net of deferred income tax, calculated as if the net assets were acquired on June 30, 2018. The actual bargain purchase gain to be recorded in our September 30, 2018 financial statements is expected to be materially different, due to the changes in Ameron’s working capital balances between June 30, 2018 and the acquisition date of July 27, 2018, as well as possible changes as the purchase price allocation is completed. This bargain purchase gain is not reflected in the unaudited pro forma condensed combined statements of operations because it is a nonrecurring item that is directly related to the transaction.

(i)

Reflects the income tax effect of pro forma adjustments based on the estimated blended federal and state statutory income tax rate of 24.4% and 37.8% for the six months ended June 30, 2018 and the year ended December 31, 2017, respectively, adjusted for the impact of the realizabilty of losses from operations.