ANNUAL REPORT  Exhibit 13 is the Corporations 2001 Annual
Report to Stockholders.  This 10-K Report should be read only in
conjunction with that Annual Report.  In the event you do not already have a copy
of the Annual Report, one may be obtained by contacting Ameron, attention;
Corporate Secretary, Post Office Box 7007, Pasadena, California
91109-7007.  The telephone number is
(626) 683-4000.  Exhibit
13     Ameron International  2001  Financial Section  ContentsSelected
  Consolidated Financial InformationManagements
  Discussion and Analysis of Financial Condition and Results of OperationsConsolidated Statements
  of IncomeConsolidated Balance
  SheetsConsolidated
  Statements of Cash FlowsConsolidated
  Statements of Stockholders EquityConsolidated
  Statements of Comprehensive IncomeNotes to
  Consolidated Financial StatementsIndependent Auditors
  ReportManagements
  Letter  21 
   SELECTED CONSOLIDATED FINANCIAL
INFORMATION  Year ended
  November 30,2001
  
  2000
  
  1999
  
  1998
  
  1997(Dollars in thousands, except per share data)Per Common Share DataNet incomebasic
  
  $
  7.17
  
  $
  6.42
  
  $
  5.57
  
  $
  5.17
  (1)
  $
  4.84Net incomediluted
  
  6.89
  
  6.41
  
  5.54
  
  5.08
  (1)
  4.73Dividends
  
  1.28
  
  1.28
  
  1.28
  
  1.28
  
  1.28Weighted average shares (basic)
  
  3,871,345
  
  3,946,566
  
  3,996,237
  
  4,016,852
  
  4,003,452Weighted average shares (diluted)
  
  4,024,294
  
  3,952,513
  
  4,023,248
  
  4,084,377
  
  4,094,885Stock price  high
  
  77.87
  
  43.00
  
  47.75
  
  64.63
  
  70.00Stock price  low
  
  34.06
  
  32.19
  
  34.69
  
  33.38
  
  46.38Price/earnings ratio (range)
  
  11-5
  
  7-5
  
  9-7
  
  13-7
  
  15-10Operating ResultsSales
  
  $
  551,396
  
  $
  550,661
  
  $
  545,081
  
  $
  552,146
  
  $
  533,506Gross profit
  
  138,084
  
  139,792
  
  142,982
  
  139,212
  
  135,683Interest expense, net
  
  (10,213
  )
  (12,244
  )
  (12,938
  )
  (15,077
  )
  (11,855
  )Provision for income taxes
  
  (10,850
  )
  (8,448
  )
  (10,482
  )
  (11,171
  )
  (11,874
  )Net income
  
  27,741
  
  25,345
  
  22,273
  
  20,746
  (1)
  19,372Net income/sales
  
  5.0
  %
  4.6
  %
  4.1
  %
  3.8
  %
  3.6
  %Return on equity
  
  14.3
  %
  14.1
  %
  12.9
  %
  13.0
  %
  13.0
  %Financial Condition at Year-endWorking capital
  
  $
  156,490
  
  $
  135,626
  
  $
  123,748
  
  $
  146,860
  
  $
  154,027Property,  plant and
  equipment, net
  
  145,801
  
  145,196
  
  149,597
  
  157,918
  
  127,678Investments, advances and equity inundistributed earnings of joint ventures
  
  18,780
  
  21,773
  
  23,046
  
  22,712
  
  34,307Total assets
  
  485,080
  
  478,449
  
  470,569
  
  500,219
  
  433,225Long-term debt, less current portion
  
  137,197
  
  140,718
  
  135,237
  
  165,308
  
  140,917Cash FlowExpenditures for property, plant and equipment
  
  $
  19,297
  
  $
  21,050
  
  $
  19,672
  
  $
  32,744
  
  $
  24,860Depreciation and amortization
  
  18,633
  
  18,022
  
  18,986
  
  18,699
  
  16,676Business acquisitions
  
  
  
  
  
  
  
  46,419
  
    (1)
Includes $17.5 million gain, net of income taxes, on sales of assets and $14.1
million charges, net of income taxes, on asset write-downs and other charges.  22 
   MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL 
CONDITION AND RESULTS OF OPERATIONS  LIQUIDITY AND CAPITAL RESOURCES  During 2001, the Company generated $27.7
million of cash from operating activities, compared to $25.8 million in 2000.
The increase is primarily attributable to an increase in net income and a net
positive change in operating assets and liabilities and operating activities
partially offset by a decrease in dividends from joint ventures.  In 2001, capital expenditures totaled $19.3
million, compared to $21.1 million in 2000. Capital expenditures in 2001 were
primarily for replacement and refurbishment of machinery and equipment at
existing facilities and completion of a new pole manufacturing facility in
Alabama. During the fiscal year ending November 30, 2002, the Company
anticipates spending approximately $15 million to $25 million for capital
expenditures, which will be funded from existing cash balances and lines of
credit, as well as funds generated from operations.  Net debt repayments totaled $4.6 million in
2001, compared to net borrowings of $5.2 million in 2000. Common stock
dividends totaled $5.0 million in 2001 and $5.1 million in 2000. The Company
repurchased treasury stock in 2000 for $4.5 million.  Cash and cash equivalents at November 30,
2001 totaled $11.3 million, compared to $11.5 million as of November 30, 2000.
At November 30, 2001, the Company had total debt outstanding of $149.9 million
and $99.9 million in unused credit lines available to fund operating and
investing activities worldwide. Management believes that cash flows from
operations and current cash balances, together with currently available lines
of credit, will be sufficient to meet operating requirements in 2002. Cash
available from operations could be affected by any general economic downturn or
any downturn or adverse changes in the Companys business, such as loss of
customers or significant material price increases. The Companys contractual obligations and
commercial commitments at November 30, 2001 are summarized as follows (in
thousands):  Payments
  Due by PeriodLess than
  
  1-3
  
  4-5
  
  After 5Contractual Obligations
  
  Total
  
  1 year
  
  years
  
  years
  
  yearsLong-Term Debt (a)
  
  $
  145,794
  
  $
  8,597
  
  $
  104,831
  
  $
  16,666
  
  $
  15,700Operating Leases
  
  41,013
  
  4,864
  
  7,658
  
  4,361
  
  24,130Total Contractual Obligations (b)
  
  $
  186,807
  
  $
  13,461
  
  $
  112,489
  
  $
  21,027
  
  $
  39,830Amount of CommitmentExpiration Per Period1Total Amounts
  
  Less than
  
  1-3
  
  4-5
  
  After 5Commercial Commitments
  
  Committed
  
  1 year
  
  years
  
  years
  
  yearsLines of Credit (a)
  
  $
  4,080
  
  $
  4,080
  
  $
  
  
  $
  
  
  $
  Standby Letters of Credit (c)
  
  2,922
  
  2,922
  
  
  
  
  
  Guarantees (d)
  
  4,692
  
  4,692
  
  
  
  
  
  Total Commercial Commitments (b)
  
  $
  11,694
  
  $
  11,694
  
  $
  
  
  $
  
  
  $
    (a)Included in
long-term debt is $84,910 outstanding under unsecured bank lines supported by a
revolving credit facility, due in 2003. Lines of credit represent short-term
borrowings by the Companys foreign subsidiaries. (b)The Company has
no capitalized lease obligations, unconditional purchase obligations, or
standby repurchase obligations. (c)Not included
are standby letters of credit of $15,700 supporting industrial development
bonds and $3,254 supporting a bank loan, which are included in long-term debt. (d)The Company
guarantees bank credit facilities for a joint venture.  RESULTS OF OPERATIONS: 2001 COMPARED WITH 2000  General  Net income per diluted share for the year
ended November 30, 2001 was $6.89 on sales of $551.4 million, compared to $6.41
per share on sales of $550.7 million in 2000. The performance of consolidated
operations, principally the Water Transmission and the Performance Coatings
& Finishes Groups, offset the lower levels of equity income from
joint-venture companies.  Sales  Sales increased $0.7 million in 2001. Each of
Amerons four operating segments, except for the Water Transmission Group, had
higher sales in 2001 than in the prior year. Additionally, total sales from
Amerons foreign operations would have been approximately $8 million higher in
2001 if foreign exchange rates had remained at 2000 levels.  Performance Coatings & Finishes sales
increased by $2.0 million because of higher sales of protective coatings by the
Companys U.S. and European operations. Sales of product finishes declined,
reflecting the different market conditions in the British and Australian
manufacturing  23 
   sectors. U.S. operations had slightly higher
sales despite soft conditions in the chemical processing and general industrial
markets. Sales into U.S. marine and offshore markets improved, and distributor
sales, principally for commercial and industrial facilities, also strengthened.
European operations benefited from higher sales of fire-protection coatings,
sales into Eastern Europe and the former Soviet Union and strong demand for
pipe coatings in the Middle East. Worldwide coatings markets began to slow in
the fourth quarter of 2001. The near-term outlook for the Performance Coatings
& Finishes Group remains uncertain, given worldwide economic conditions.  Fiberglass-Composite Pipe Groups sales
increased $3.8 million in 2001, compared to 2000, due to deliveries of water
distribution piping for a large project in California. Other U.S. markets, such
as fuel handling and offshore, continued at lower levels, while industrial
demand softened. Centron International, a wholly-owned subsidiary in Texas
which supplies fiberglass pipe for downhole applications and high-pressure
oilfield recovery lines, benefited from increased demand due to strong oilfield
markets worldwide. Operations in Europe and Asia had lower sales, reflecting
declining industrial and marine markets. The Fiberglass-Composite Pipe Group
benefited in 2001 from strong demand for oilfield piping. Oil prices have
fallen in recent months. However, if oil prices do not significantly decline
from current levels, the performance of the Fiberglass-Composite Pipe Group is
expected to improve.  The Water Transmission Group had $6.2 million
lower sales in 2001 than in 2000, primarily as a result of completion of a
sizable project in Colombia in 2000. U.S. sales increased approximately $9
million in 2001, because of demand for water piping to meet the needs of
population growth, infrastructure rehabilitation and the energy markets. Sales
were particularly strong in Northern California. Revenue is recognized in the
Water Transmission Group primarily under the percentage of completion method
and is subject to a certain level of estimation, which affects the timing of
revenue, costs and profit. Estimates are reviewed on a consistent basis and are
adjusted when actual results are expected to significantly differ from those
estimates. The outlook for Water Transmission remains positive for both the
near and long term.  The Infrastructure Products Group completed
2001 with $1.7 million higher sales. Amerons Hawaiian operations were
adversely impacted by soft construction markets on Oahu and Maui. Residential
and military construction markets were strong, but commercial building remained
weak. Sales of poles increased as demand for both concrete and steel lighting
poles and traffic poles grew. The outlook for the Infrastructure Products Group
is mixed. The market conditions in Hawaii are not expected to improve in the
short term, and the outlook for pole sales is positive provided housing starts
do not decline significantly and government infrastructure spending continues
near present levels.  Gross
Profit  Gross profit in 2001 was $138.1 million or
25.0% of sales, compared to gross profit of $139.8 million or 25.4% of sales in
2000. Gross margins declined due to change in product and project mix,
competitive pressures, and differences in plant utilization.  Performance Coatings & Finishes margins
benefited from productivity enhancements, as well as favorable raw material
costs. Likewise, margins of the Water Transmission Group improved as a result
of completion of the lower-profit project in Colombia in 2000, improved project
and product mix and improved manufacturing efficiencies. Margins of the
Fiberglass-Composite Pipe Group declined due to product development costs,
unfavorable product mix and uneven plant capacity utilization caused by the
lagging industrial, marine and fuel-handling markets throughout the world.
Infrastructure Products also had lower margins as a result of the start-up
costs of the new concrete pole plant in Alabama and higher costs in Hawaii.
Profits from Hawaiian operations were lower because of higher maintenance
costs, higher labor expenses and development costs related to the expansion of
Amerons quarry on Oahu.  Selling,
General and Administrative Expenses  Selling, general and administrative expenses
totaled $101.8 million or 18.5% of sales in 2001, compared to $113.8 million or
20.7% in 2000. The decline in expenses was due in part to profit enhancement
programs implemented during the last year in the Performance Coatings &
Finishes Group. Additionally, lower insurance and benefit costs were required
throughout the company in 2001 due to an improved safety experience and lower
costs related to product warranties and other legal claims.  Equity and
Other Income  Equity in earnings of joint ventures declined
to $8.0 million in 2001 from $12.7 million in 2000. Equity income of each joint
venture declined, with the largest decrease from TAMCO, Amerons 50%-owned
steel mini-mill in California. Amerons equity in TAMCOs earnings dropped as
TAMCO suffered from competitive pressures caused by imports of foreign steel
into the U.S. Additionally, TAMCO was impacted by dramatic energy cost
increases in California during 2001.  Other income included royalties and fees from
joint ventures and licensees, currency gains and losses, and other
miscellaneous income. Royalties and fees totaled $5.0 million in 2001 compared
to $5.9 million in 2000. In 2000, the Company sold an idle property for a
pretax gain of $0.9 million.  Interest  Interest expense totaled $10.5 million in
2001, compared to $12.8 million in 2000. The decrease reflected lower rates and
lower average borrowing levels in 2001.  Provision
for Income Taxes  The effective tax rate increased to 28% in
2001 from 25% in 2000. Income from certain foreign and joint venture operations
is taxed at rates substantially lower than U.S. statutory tax rates. The
domestic-sourced income was substantially greater in 2001 than in 2000. The
provision for income taxes in 2001 was $10.9 million, an increase of $2.4
million from 2000. The increase in provision for income taxes resulted
primarily from: an increase of $1.7 million due to higher pretax income at
statutory rates, an increase of $4.6 million related to the mix of income from
domestic and foreign operations and joint ventures and a $4.0 million benefit
from research and development credits related to the 1990 through 2000 tax
years and filed in 2001. The Company does not expect a similar benefit from
research and development credits in 2002.  24 
   RESULTS OF
OPERATIONS: 2000 COMPARED WITH 1999  General  Net income per diluted share for the year
ended November 30, 2000 was $6.41 on sales of $550.7 million, compared to $5.54
per share on sales of $545.1 million in 1999.  Sales  Sales increased by $5.6 million in 2000, in
spite of adverse foreign exchange effects upon sales of $18 million, primarily
because of continued strong demand for water transmission and distribution
piping in the western U.S. and higher demand for oilfield piping worldwide.  Sales of the Performance Coatings &
Finishes Group decreased by $12.6 million primarily due to weaker foreign
currencies. Additionally, the Companys finishes business in the U.K. suffered
from the depressed conditions in the British manufacturing sector. The
anticipated growth of protective coatings did not occur because of delayed
spending in key offshore and marine markets. These market conditions are
believed to have similarly impacted the Companys competitors.  The Fiberglass-Composite Pipe Groups sales
increased by $7.5 million primarily due to higher demand for oilfield piping
worldwide and a continued strong performance by the Companys operations in
Asia.  The Water Transmission Group had sales of
$149.4 million in 2000, up from $142.5 million in 1999 as a result of continued
strong demand for water transmission and distribution piping in the western
U.S.  The Infrastructure Products Group had sales
of $112.1 million in 2000, up from $108.6 million in 1999. The increase came
from the Companys Hawaiian operations, offset by slightly lower sales from the
Companys pole business.  Gross
Profit  Gross profit in 2000 was $139.8 million or
25.4% of sales, compared to gross profit of $143.0 million or 26.2% of sales in
1999. The decrease in 2000 primarily reflected a change in product mix. Water
Transmission accounted for much of the margin decline because of higher margin
projects in 1999. Additionally, Infrastructures Products was impacted by a
strike in Hawaii early in 2000.  Selling,
General and Administrative Expenses  Selling, general and administrative expenses
totaled $113.8 million or 20.7% of sales in 2000, compared to $113.2 million or
20.8% in 1999. Increased costs for Fiberglass-Composite Pipe related to product
claims were offset by lower costs of the Performance Coatings & Finishes
Group.  Equity and
Other Income  Equity in earnings of joint ventures totaled
$12.7 million in 2000, compared to $8.5 million in 1999. The increase reflected
the continued strong performances of the Companys joint ventures.  Other income included royalties and fees from
joint ventures and licensees, currency gains and losses, and other
miscellaneous income. Royalties and fees totaled $5.9 million in 2000 compared
to $5.4 million in 1999.  In 2000, the Company sold an idle property
for a pretax gain of $0.9 million. The Company also sold two idle properties in
1999 for a pretax gain of $1.2 million.  Interest  Interest expense totaled $12.8 million in
2000, compared to $13.2 million in 1999. The decrease reflected lower average
borrowing levels in 2000.  Provision
for Income Taxes  The effective tax rate decreased to 25% in
2000 from 32% in 1999. The lower effective tax rate resulted from the mix of
income from domestic and foreign operations and joint ventures. Income from
certain foreign and joint venture operations is taxed at rates substantially
lower than U.S. statutory tax rates.  MARKET RISKS  Foreign
Currency Risk  The Company operates internationally, giving
rise to exposure to market risks from changes in foreign exchange rates. The
Company borrows in various currencies to reduce the level of net assets subject
to changes in foreign exchange rates. In addition, the Company purchases
foreign exchange forward and option contracts to hedge firm commitments, such
as receivables and payables, denominated in foreign currencies. The Company
does not use the contracts for speculative or trading purposes. At November 30,
2001, the Company had 14 foreign currency forward contracts expiring at various
dates through February 2002, with an aggregate face value of $4,682,000.  Debt Risk  The Company has variable-rate, short-term and
long-term debt as well as fixed-rate, long-term debt. The fair value of the
Companys fixed-rate debt is subject to changes in interest rates. The
estimated fair value of the Companys variable-rate debt approximates the
carrying value of the debt since the variable interest rates are market-based,
and the Company believes such debt could be refinanced on materially similar
terms. The Company is subject to the availability of credit to support new
requirements, to refinance amortizing long-term debt and to refinance
short-term debt.   25 
   As of November 30, 2001, the estimated fair
value of notes payable by the Company totaling $41,666,000, with a fixed rate
of 7.92%, was $43,656,000. The Company is required to repay these notes in
annual installments of $8,333,000 from 2002 to 2006, inclusive. As of November
30, 2001, the Company borrowed $84,910,000 under variable-rate, unsecured bank
lines supported by a variable-rate, long-term revolving credit facility which
permits borrowings up to $150,000,000. The average interest rate under such
lines was 2.84% as of November 30, 2001. Borrowings under the revolving credit
facility are scheduled to be repaid in 2003. The Company had $7,200,000 of
variable-rate industrial development bonds at a rate of 1.65% as of November
30, 2001, payable in 2016. The Company had $8,500,000 of variable-rate
industrial development bonds at a rate of 1.80% as of November 30, 2001,
payable in 2021. The Company borrowed $3,254,000 under a variable-rate,
unsecured bank loan, payable in 2004, at a rate of 18.67% as of November 30,
2001. The Company owed $264,000 to a foreign bank with an interest rate of 4.31%
on November 30, 2001. This variable-rate loan is payable in 2002.  CONTINGENCIES  An action was filed in 1992 in the U.S.
District Court for the District of Arizona by the Central Arizona Water
Conservation District (CAWCD) seeking damages against several parties,
including the Company and the Companys customer, Peter Kiewit Sons Company
(Kiewit), in connection with six prestressed concrete pipe siphons furnished
and installed in the 1970s as part of the Central Arizona Project (CAP), a
federal project to bring water from the Colorado River to Arizona. The CAWCD
also filed separate actions against the U.S. Bureau of Reclamation (USBR) in
the U.S. Court of Claims and with the Arizona Projects Office of the USBR in
connection with the CAP siphons. The CAWCD alleged that the six CAP siphons
were defective and that the USBR and the defendants in the U.S. District Court
action were liable for damages for the repair or replacement of those siphons.
On September 14, 1994, the U.S. District Court granted the Companys motion to
dismiss the CAWCD action and entered judgment against the CAWCD and in favor of
the Company and its co-defendants. CAWCD filed a notice of appeal with the
Ninth Circuit Court of Appeals.  Separately, on September 28, 1995, the Contracting
Officer for the USBR issued a final decision claiming for the USBR
approximately $40 million in damages against Kiewit, based in part on the
Contracting Officers finding that the siphons supplied by the Company were
defective. That claim amount is considered by the Company to be duplicative of
the damages sought by the CAWCD for the repair or replacement of the siphons in
the aforementioned action in the U.S. District Court for the District of
Arizona. The Contracting Officers final decision was appealed by Kiewit to the
U.S. Department of the Interior Board of Contract Appeals (IBCA). The Company
is actively cooperating with and assisting Kiewit in the administrative appeal
of that final decision before the IBCA. Trial on that appeal commenced in
November 2000; however, the proceeding was stayed with the concurrence of the
parties pending efforts aimed at a possible settlement of the matter.
Settlement efforts involving the USBR, Kiewit, the Company and various
insurance carriers are continuing. In the meantime, activity on the IBCA
appeal, as well as the aforementioned CAWCD appeal, continues to be suspended.  The Company internally, as well as through
independent third-party consultants, has conducted engineering analysis
regarding the allegations that the CAP siphons were defective, and believes
that the siphons were manufactured in accordance with the project
specifications and other contract requirements; and, therefore, it is not
liable for any claims relating to the siphons, whether by the CAWCD or by the
USBR. The Company believes that it has meritorious defenses to these actions
and that resultant liability, if any, should not have a material effect on the
financial position of the Company or its results of operations.  In addition, certain other claims, suits and
complaints that arise in the ordinary course of business, have been filed or
are pending against the Company. Management believes that these matters, and
the matters discussed above, are either adequately reserved, covered by insurance,
or would not have a material effect on the Companys financial position or its
results of operations if disposed of unfavorably.  The Company is also subject to federal, state
and local laws and regulations concerning the environment and is currently
participating in administrative proceedings at several sites under these laws.
In the early 1970s, the Company disposed of certain quantities of waste at the
Stringfellow Hazardous Waste Site in Riverside County, California, which is one
of several priority sites on the Superfund list established by the U.S.
Environmental Protection Agency. During 2001 the Company settled the only
current action against it in connection with the remediation of that site. The
settlement did not have a material impact on the Companys financial position
or its results of operations. While the Company finds it difficult to estimate
with any certainty the total cost of remediation at the several sites, on the
basis of currently available information and reserves provided, the Company
believes that the outcome of such environmental regulatory proceedings will not
have a material effect on the Companys financial position or its results of
operations.  CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995  Any of the statements contained in this
Annual Report that refer to the Companys estimated or anticipated future
results are forward-looking and reflect the Companys current analysis of
existing trends and information. Actual results may differ from current
expectations based on a number of factors affecting Amerons businesses,
including competitive conditions and changing market conditions. In addition,
matters affecting the economy generally, including the state of economies
worldwide, can affect the Companys results. These forward-looking statements
represent the Companys judgment only as of the date of this Annual Report.
Since actual results could differ materially, the reader is cautioned not to rely
on these forward-looking statements. Moreover, the Company disclaims any intent
or obligation to update these forward-looking statements.   26 
   CONSOLIDATED STATEMENTS OF INCOME  Year ended
  November 30,2001
  
  2000
  
  1999(Dollars in thousands, except per share data)Sales
  
  $
  551,396
  
  $
  550,661
  
  $
  545,081Cost of sales
  
  (413,312
  )
  (410,869
  )
  (402,099
  )Gross profit
  
  138,084
  
  139,792
  
  142,982Selling, general and administrative expenses
  
  (101,828
  )
  (113,844
  )
  (113,165
  )Equity in earnings of joint ventures
  
  7,994
  
  12,664
  
  8,499Other income, net
  
  4,554
  
  7,425
  
  7,377Income before interest and income taxes
  
  48,804
  
  46,037
  
  45,693Interest expense, net
  
  (10,213
  )
  (12,244
  )
  (12,938
  )Income before income taxes
  
  38,591
  
  33,793
  
  32,755Provision for income taxes
  
  (10,850
  )
  (8,448
  )
  (10,482
  )Net income
  
  $
  27,741
  
  $
  25,345
  
  $
  22,273Net income per share (basic)
  
  $
  7.17
  
  $
  6.42
  
  $
  5.57Net income per share (diluted)
  
  $
  6.89
  
  $
  6.41
  
  $
  5.54Weighted average shares (basic)
  
  3,871,345
  
  3,946,566
  
  3,996,237Weighted average shares (diluted)
  
  4,024,294
  
  3,952,513
  
  4,023,248  The accompanying notes are an integral part of these consolidated
financial statements.   27 
   CONSOLIDATED BALANCE SHEETS  As of
  November 30,2001
  
  2000(Dollars
  in thousands)AssetsCurrent assetsCash and cash equivalents
  
  $
  11,315
  
  $
  11,514Receivables, less allowances of $6,699 in 2001
  and $6,616 in 2000
  
  135,963
  
  139,961Inventories
  
  92,534
  
  82,470Deferred income taxes
  
  19,242
  
  23,720Prepaid expenses and other current assets
  
  6,654
  
  6,305Total current assets
  
  265,708
  
  263,970Investments, advances and equity in undistributed earnings of joint
  ventures
  
  18,780
  
  21,773Property,plant and
  equipmentLand
  
  34,826
  
  34,147Buildings
  
  71,477
  
  66,958Machinery and equipment
  
  254,274
  
  245,978Construction in progress
  
  3,590
  
  6,679Total property,plant and
  equipment at cost
  
  364,167
  
  353,762Accumulated depreciation
  
  (218,366
  )
  (208,566
  )Total property,plant and
  equipment, net
  
  145,801
  
  145,196Intangible assets, net of accumulated amortization of $7,623 in 2001
  and $6,775 in 2000
  
  13,158
  
  13,972Other assets
  
  41,633
  
  33,538Total assets
  
  $
  485,080
  
  $
  478,449  The accompanying notes are an integral part of these consolidated
financial statements.   28 
   CONSOLIDATED BALANCE SHEETS  As of November 30,2001
  
  2000(Dollars in thousands, except per share data)Liabilities and Stockholders EquityCurrent liabilitiesShort-term borrowings
  
  $
  4,080
  
  $
  5,001Current portion of long-term debt
  
  8,597
  
  8,848Trade payables
  
  46,703
  
  41,127Accrued liabilities
  
  47,486
  
  58,265Income taxes payable
  
  2,352
  
  15,103Total current liabilities
  
  109,218
  
  128,344Long-term debt, less current portion
  
  137,197
  
  140,718Other long-term liabilities
  
  34,418
  
  26,957Total liabilities
  
  280,833
  
  296,019Commitments and ContingenciesStockholders equityCommon stock, par value $2.50 a share, authorized 12,000,000 shares,
  outstanding 3,873,007 shares in 2001 and 3,869,357 shares in 2000, net of
  treasury shares
  
  13,017
  
  13,007Additional paid-in capital
  
  19,457
  
  17,857Retained earnings
  
  247,406
  
  224,620Accumulated other comprehensive loss
  
  (26,974
  )
  (24,382
  )Treasury stock (1,333,655 shares in 2001 and in 2000)
  
  (48,659
  )
  (48,672
  )Total stockholders equity
  
  204,247
  
  182,430Total liabilities and stockholders equity
  
  $
  485,080
  
  $
  478,449  The accompanying notes are an integral part of these consolidated
financial statements.  29 
   CONSOLIDATED STATEMENTS OF CASH FLOWS   Year
  ended November 30,2001
  
  2000
  
  1999Operating Activities
  
  (Dollars
  in thousands)Net income
  
  $
  27,741
  
  $
  25,345
  
  $
  22,273Adjustments to reconcile net income to netcash provided by operating
  activities:Depreciation
  
  17,820
  
  17,185
  
  18,017Amortization
  
  813
  
  837
  
  969Provision for deferred income taxes
  
  8,865
  
  3,730
  
  (1,659
  )Equity in earnings of joint ventures
  
  (7,994
  )
  (12,664
  )
  (8,499
  )Dividends from joint ventures
  
  8,300
  
  15,105
  
  7,048Loss (gain) fromsale of property,plant and equipment
  
  56
  
  (851
  )
  (1,223
  )Stock compensation expense
  
  1,480
  
  
  
  Changes in operating assets and liabilities:Receivables
  
  3,905
  
  (27,991
  )
  14,558Inventories
  
  (10,312
  )
  9,990
  
  13,369Prepaid expenses and other current assets
  
  (352
  )
  123
  
  (597
  )Other assets
  
  (8,103
  )
  (7,157
  )
  (7,451
  )Trade payables
  
  5,573
  
  6,403
  
  380Other current liabilities
  
  (23,163
  )
  (4,791
  )
  (7,775
  )Other long-term liabilities
  
  3,103
  
  536
  
  (4,344
  )Net cash provided by operating activities
  
  27,732
  
  25,800
  
  45,066INVESTING ACTIVITIESProceeds from sale of property, plant and equipment
  
  867
  
  1,593
  
  3,487Additions to property, plant and equipment
  
  (19,297
  )
  (21,050
  )
  (19,672
  )Other
  
  
  
  
  
  (96
  )Net cash used in investing activities
  
  (18,430
  )
  (19,457
  )
  (16,281
  )Financing ActivitiesNet change in short-term
  borrowings
  
  (954
  )
  2,071
  
  910Issuance of debt
  
  11,808
  
  17,000
  
  1,981Repayment of debt, net
  
  (15,492
  )
  (13,826
  )
  (30,620
  )Dividends on common stock
  
  (4,955
  )
  (5,061
  )
  (5,111
  )Issuance of common stock
  
  130
  
  
  
  Purchase of treasury stock
  
  13
  
  (4,478
  )
  (1,415
  )Net cash used in financing activities
  
  (9,450
  )
  (4,294
  )
  (34,255
  )Effect of exchange rate changes on cash and cash equivalents
  
  (51
  )
  (1,056
  )
  (385
  )Net change in cash and cash equivalents
  
  (199
  )
  993
  
  (5,855
  )Cash and cash equivalents at beginning of year
  
  11,514
  
  10,521
  
  16,376Cash and cash equivalents at end of year
  
  $
  11,315
  
  $
  11,514
  
  $
  10,521  The accompanying notes are an integral part of these consolidated
financial statements.   30 
   CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY  Common StockShares Outstanding
  
  Amount
  
  Additional Paid-in Capital
  
  Retained Earnings
  
  Accumulated
  Other Comprehensive Loss
  
  Treasury Stock
  
  Total(Dollars in thousands, except per share data)Balance, December 1, 1998
  
  4,030,112
  
  $
  13,007
  
  $
  17,828
  
  $
  187,174
  
  $
  (8,062
  )
  $
  (42,779
  )
  $
  167,168Net income  1999
  
  
  
  
  
  
  
  22,273
  
  
  
  
  
  22,273Minimum pension liability adjustment
  
  
  
  
  
  
  
  
  
  502
  
  
  
  502Foreign currency translation adjustment
  
  
  
  
  
  
  
  
  
  (5,326
  )
  
  
  (5,326
  )Dividends on common stock of $1.28 per share
  
  
  
  
  
  
  
  (5,111
  )
  
  
  
  
  (5,111
  )Treasury stock purchase
  
  (38,200
  )
  
  
  
  
  
  
  
  
  (1,415
  )
  (1,415
  )Stock compensation expense
  
  
  
  
  
  29
  
  
  
  
  
  
  
  29Balance, November 30, 1999
  
  3,991,912
  
  13,007
  
  17,857
  
  204,336
  
  (12,886
  )
  (44,194
  )
  178,120Net income  2000
  
  
  
  
  
  
  
  25,345
  
  
  
  
  
  25,345Foreign currency translation adjustment
  
  
  
  
  
  
  
  
  
  (11,496
  )
  
  
  (11,496
  )Dividends on common stock of $1.28 per share
  
  
  
  
  
  
  
  (5,061
  )
  
  
  
  
  (5,061
  )Treasury stock purchase
  
  (122,555
  )
  
  
  
  
  
  
  
  
  (4,478
  )
  (4,478
  )Balance, November 30, 2000
  
  3,869,357
  
  13,007
  
  17,857
  
  224,620
  
  (24,382
  )
  (48,672
  )
  182,430Net income  2001
  
  
  
  
  
  
  
  27,741
  
  
  
  
  
  27,741Exercise of stock options
  
  3,650
  
  10
  
  120
  
  
  
  
  
  
  
  130Foreign currency translation adjustment
  
  
  
  
  
  
  
  
  
  95
  
  
  
  95Comprehensive loss from joint venture
  
  
  
  
  
  
  
  
  
  (2,687
  )
  
  
  (2,687
  )Dividends on common stock of $1.28 per share
  
  
  
  
  
  
  
  (4,955
  )
  
  
  
  
  (4,955
  )Treasury stock adjustment
  
  
  
  
  
  
  
  
  
  
  
  13
  
  13Stock compensation expense
  
  
  
  
  
  1,480
  
  
  
  
  
  
  
  1,480Balance, November 30, 2001
  
  3,873,007
  
  $
  13,017
  
  $
  19,457
  
  $
  247,406
  
  $
  (26,974
  )
  $
  (48,659
  )
  $
  204,247   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  Year
  ended November 30,2001
  
  2000
  
  1999(Dollars in thousands)Net income
  
  $
  27,741
  
  $
  25,345
  
  $
  22,273Foreign currency translation adjustment
  
  95
  
  (11,496
  )
  (5,326
  )Minimum pension liability adjustment
  
  
  
  
  
  502Comprehensive loss from joint venture
  
  (2,687
  )
  
  
  Comprehensive income
  
  $
  25,149
  
  $
  13,849
  
  $
  17,449  The accompanying notes are an integral part of these consolidated
financial statements.  31 
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1Summary of Significant Accounting Policies  Principles of Consolidation The consolidated financial statements include
the accounts of Ameron International Corporation and all wholly-owned subsidiaries
(Ameron or the Company). All material intercompany accounts and
transactions have been eliminated.\  Reclassifications Certain prior year balances have been
reclassified to conform with the current year presentation.  Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates include revenue and
costs recorded under percentage of completion accounting and reserves
associated with receivables, inventories, investments in joint ventures, income
taxes and environmental and legal contingencies. Actual results could differ
from those estimates.  Revenue Recognition Revenue from sales of coatings,
fiberglass-composite pipe, construction products and certain other products is
recorded at the time the goods are shipped. Revenue from sales of concrete and
steel pipe is primarily recognized under the percentage of completion method.
However, in certain cases, revenue is recognized at shipment or at the time the
pipe is inspected and accepted by the customer.  Research and Development Costs Research and development costs, related
primarily to the development, design and testing of products, are expensed as
incurred. Such costs, which are included in selling, general and administrative
expenses, were approximately $5,550,000 in 2001, $4,996,000 in 2000, and
$4,258,000 in 1999.  Environmental Clean-up Costs The Company expenses environmental clean-up
costs related to existing conditions resulting from past or current operations
and from which no current or future benefit is anticipated. The Company
determines its liability on a site-by-site basis and records a liability at the
time when it is probable and can be reasonably estimated. The estimated
liability of the Company is not discounted or reduced for possible recoveries
from insurance carriers.  Income
Taxes Deferred income tax assets and liabilities
are computed for differences between the financial statement and income tax
bases of assets and liabilities. Such deferred income tax asset and liability
computations are based on enacted tax laws and rates applicable to periods in
which the differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce deferred income tax assets to the
amounts expected to be realized.  Net Income Per Share Basic net income per share is computed on the
basis of the weighted average number of common shares outstanding during the
periods presented. Diluted net income per share is computed on the basis of the
weighted average number of common shares outstanding plus the effect of
outstanding stock options, using the treasury stock method.  Cash and Cash Equivalents Cash equivalents represent liquid investments
with maturities of three months or less when purchased.  Inventory Valuation Inventories are valued at the lower of cost
or market. Cost is principally determined under the first-in, first-out method.
Certain steel inventories are valued using the last-in, first-out method.  Equity Method of Accounting Investments in joint ventures or affiliates
(joint ventures) over which the Company has significant influence are
accounted for under the equity method of accounting, whereby the investment is
carried at the cost of acquisition, plus the Companys equity in undistributed
earnings or losses since acquisition. Reserves are provided where management
determines that a portion of the investment or earnings may not be realizable.  Property, Plant and Equipment Items capitalized as property, plant and
equipment, including improvements to existing facilities, are recorded at cost.
Construction in progress represents capital expenditures incurred for assets
not yet placed in service. Capitalized interest was not material for the periods
presented.  Depreciation is computed principally using
the straight-line method based on the estimated useful lives of the related
assets, generally 3 to 40 years. Leasehold improvements are amortized over the
shorter of the life of the improvement or the term of the lease.  Amortization of Intangibles Costs in excess of net assets acquired of
$14,639,000 are amortized on a straight-line basis over periods ranging up to
40 years. Other intangible assets are amortized on a straight-line basis over
periods ranging from 3 to 15 years.  Long-Lived Assets The Company reviews the recoverability of
intangible and other long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying value of such assets may
not be recoverable. If the estimated future, undiscounted cash flows from the
use of an asset are less than its carrying value, a write-down is recorded to
reduce the related asset to estimated fair value.  Self Insurance The Company utilizes third-party insurance
subject to varying retention levels or self insurance. Such self insurance
relates to losses and liabilities primarily associated with workers
compensation claims and general, product and vehicle liability. Losses are
accrued based upon the Companys estimates of the aggregate liability for
claims incurred using certain actuarial assumptions followed in the insurance
industry and based on the Companys experience.   32 
   Foreign Currency Translation The functional currencies for the Companys
foreign operations are the applicable local currencies. The translation from
the applicable foreign currencies to U.S. dollars is performed for balance
sheet accounts using current exchange rates in effect at the balance sheet date
and for revenue and expense accounts using a weighted average exchange rate
during the period. The resulting translation adjustments are recorded in
accumulated other comprehensive loss. The Company advances funds to certain
foreign subsidiaries that are not expected to be repaid in the foreseeable
future. Translation adjustments arising from these advances are also included
in accumulated other comprehensive
loss. Gains or losses resulting from foreign currency transactions are included
in other income.  Derivative Financial Instruments and Risk Management The Company operates internationally, giving
rise to exposure to market risks from changes in foreign exchange rates.
Derivative financial instruments, primarily foreign exchange contracts, are
used by the Company to reduce those risks. The Company does not hold or issue
financial or derivative financial instruments for trading or speculative
purposes. As of November 30, 2001 and 2000, the Company had foreign currency
forward contracts with an aggregate face value of approximately $4,682,000 and
$3,486,000, respectively.  Fair Value of Financial Instruments The fair value of financial instruments,
other than long-term debt, approximates the carrying value because of the
short-term nature of such instruments.  Concentration of Credit Risk Financial instruments that subject the
Company to credit risk consist primarily of cash equivalents, trade accounts
receivable, and forward foreign exchange contracts. Credit risk with respect to
trade accounts receivable is generally not concentrated due to the large number
of entities comprising the Companys customer base and their geographic
dispersion. The Company performs ongoing credit evaluations of its customers,
maintains an allowance for potential credit losses and, in certain instances,
maintains credit insurance. The Company actively evaluates the creditworthiness
of the financial institutions with which it conducts business.  New Accounting Pronouncements Effective December 1, 2000, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. The Company uses derivative products, such as forward and
option contracts, primarily to hedge the foreign currency market exposures
which affect certain assets and liabilities and forecasted transactions with
customers and vendors. The Company designates such derivatives primarily as
fair value hedges. As of both November 30, 2001 and December 1, 2000, the fair
values of derivatives held by the Company were not significant. Additionally,
the adoption of SFAS No. 133 at December 1, 2000 did not result in a cumulative
adjustment to either income or other comprehensive income for a change in
accounting principle.  In 1999, the Securities and Exchange
Commission (SEC) issued Staff Accounting Bulletin No. 101 (SAB 101),
Revenue Recognition in Financial Statements, and further amended it to defer
the effective date. SAB 101 summarized certain of the SECs views on the
application of accounting principles generally accepted in the United States of
America to revenue recognition. SAB 101 was adopted for the quarter ended
November 30, 2001. The adoption of SAB 101 did not have a material impact on
the Companys financial statements.  In July 2001, the Financial Accounting
Standards Board (FASB) issued two new pronouncements: SFAS No. 141, Business
Combinations, and SFAS No. 142,Goodwill and Other Intangible Assets.
SFAS No. 141 requires the purchase method of accounting for business
combinations initiated after June 30, 2001 and eliminates the pooling-of-interests
method. The Company does not believe that the adoption of SFAS No. 141 will
have a material impact on its financial statements.  SFAS No. 142 requires, among other things,
the discontinuance of goodwill amortization. In addition, the standard includes
provisions for the reclassification of certain existing recognized intangibles
as goodwill, reassessment of the useful lives of existing recognized
intangibles, reclassification of certain intangibles out of previously reported
goodwill and the identification of reporting units for purposes of assessing
potential future impairments of goodwill. SFAS No. 142 also requires the
Company to complete a transitional goodwill impairment test six months from the
date of adoption. SFAS No. 142 is effective for the Company beginning December
1, 2002, although early adoption is permitted. The Company is currently
evaluating the timing and impact of adopting SFAS No. 142.  SFAS No. 143, Accounting for Asset
Retirement Obligations, which becomes effective for the Company on December 1,
2002, addresses the obligations and asset retirement costs associated with the
retirement of tangible long-lived assets. It requires that the fair value of
the liability for an asset retirement obligation be recorded when incurred. The
asset retirement costs must be capitalized as part of the carrying value of the
long-lived asset. If the liability is settled for an amount other than the
recorded balance, either a gain or loss will be recognized at settlement. The
Company is currently assessing the impact of adopting SFAS No. 143.  SFAS No. 144, Impairment or Disposal of
Long-Lived Assets, will become effective for the Company on December 1, 2002.
SFAS No. 144 addresses financial accounting and reporting for the impairment or
disposal of long-lived assets and provides guidance on implementation issues
related to SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, and addresses the accounting for
a segment of a business accounted for as a discontinued operation. The Company
is currently assessing the impact of adopting SFAS No. 144.  Supplemental Cash Flow Information 2001
  
  2000
  
  1999(In
  thousands)Interest paid
  
  $
  10,810
  
  $
  13,778
  
  $
  12,720Income taxes paid
  
  15,939
  
  8,187
  
  18,007  33 
   NOTE 2Other Income Other income was as follows for the years
ended November 30:  2001
  
  2000
  
  1999(In
  thousands)Royalties, fees and other income from joint ventures and licensees
  
  $
  4,972
  
  $
  5,908
  
  $
  5,406(Loss) gain on sale of property,plant and equipment
  
  (56
  )
  851
  
  1,223Foreign currency loss
  
  (927
  )
  (566
  )
  (647
  )Miscellaneous
  
  565
  
  1,232
  
  1,395$
  4,554
  
  $
  7,425
  
  $
  7,377  The Company provides technical services and
receives fees, royalties and other income from several of its joint ventures
and licensees, which are included in other income.  NOTE 3Receivables Receivables were as follows at November 30:  2001
  
  2000(In
  thousands)Trade receivables
  
  $
  133,594
  
  $
  136,797Joint ventures
  
  1,393
  
  1,865Other
  
  7,675
  
  7,915Allowances
  
  (6,699
  )
  (6,616
  )$
  135,963
  
  $
  139,961  The Companys provision for bad debts was
$1,738,000 in 2001, $1,953,000 in 2000, and $4,628,000 in 1999. Trade
receivables included unbilled receivables of $19,458,000 and $8,809,000 at
November 30, 2001 and 2000, respectively.  NOTE 4Inventories Inventories were as follows at November 30:  2001
  
  2000(In
  thousands)Finished products
  
  $
  58,397
  
  $
  51,570Materials and supplies
  
  22,084
  
  18,788Products in process
  
  12,053
  
  12,112$
  92,534
  
  $
  82,470  Certain steel inventories are valued using
the last-in, first-out method. These items comprised 4.6% and 2.6% of
consolidated inventories at November 30, 2001 and 2000, respectively. If such
inventories had been valued using the first-in, first-out method, total
inventories would have increased by $832,000 and $1,232,000 at November 30,
2001 and 2000, respectively.  NOTE 5Joint Ventures Investments, advances and equity in
undistributed earnings of joint ventures were as follows at November 30:  2001
  
  2000(In
  thousands)Investmentsequity method
  
  $
  18,272
  
  $
  21,265Investmentscost method
  
  508
  
  508$
  18,780
  
  $
  21,773 The Companys investments which were
accounted for by the equity method are summarized below:  Products
  
  Joint
  Ventures
  
  Ownership InterestConcrete pipe
  
  Ameron Saudi Arabia, Ltd.
  (ASAL)
  
  30
  %Steel products
  
  TAMCO
  
  50
  %Fiberglass pipe
  
  Bondstrand, Ltd.
  
  40
  %Coatings
  
  Oasis-Ameron, Ltd.
  
  40
  % Investments in joint ventures and the amount
of undistributed earnings were as follows:  Concrete
  pipe
  
  Steel
  products
  
  Fiberglass
  pipe
  
  Coatings
  
  Total(In
  thousands)Cost
  
  $
  
  
  $
  8,482
  
  $
  2,182
  
  $
  1,054
  
  $
  11,718Comprehensive loss from
  joint venture
  
  
  
  (2,687
  )
  
  
  
  
  (2,687
  )Accumulated equity in undistributed earnings, net of reserves
  
  
  
  6,998
  
  1,602
  
  641
  
  9,241Investment November 30, 2001
  
  $
  
  
  $
  12,793
  
  $
  3,784
  
  $
  1,695
  
  $
  18,272Dividends received in 2001
  
  $
  3,325
  
  $
  2,585
  
  $
  2,070
  
  $
  320
  
  $
  8,300Cost
  
  $
  
  
  $
  8,482
  
  $
  2,182
  
  $
  1,054
  
  $
  11,718Accumulated equity in undistributed earnings, net of reserves
  
  
  
  7,304
  
  1,602
  
  641
  
  9,547Investment, November 30, 2000
  
  $
  
  
  $
  15,786
  
  $
  3,784
  
  $
  1,695
  
  $
  21,265Dividends received in 2000
  
  $
  3,493
  
  $
  8,415
  
  $
  2,666
  
  $
  531
  
  $
  15,105  During 1998, the Company recorded an
impairment charge of $10,500,000 to adjust its net investment in ASAL to zero.  The Company has provided for income taxes on
the undistributed earnings of its joint ventures, to the extent such earnings
have been included in the consolidated statements of income.  The Companys investments in ASAL,
Bondstrand, Ltd. and Oasis-Ameron, Ltd. were recorded based on audited
financial statements as of December 31, 2000, and unaudited financial
statements as of September 30,
2001. The investment in TAMCO was recorded based on audited financial
statements as of November 30, 2001. Summarized and combined financial information
for joint ventures follows:  Financial
  Condition2001
  
  2000(In
  thousands)Current assets
  
  $
  173,466
  
  $
  141,192Noncurrent assets
  
  74,431
  
  63,614$
  247,897
  
  $
  204,806Current liabilities
  
  $
  101,307
  
  $
  74,356Noncurrent liabilities
  
  15,540
  
  7,804Stockholders equity
  
  131,050
  
  122,646$
  247,897
  
  $
  204,806  Results
  of Operations2001
  
  2000
  
  1999(In thousands)Net sales
  
  $
  219,864
  
  $
  244,118
  
  $
  218,445Gross profit
  
  51,968
  
  69,263
  
  70,947Net income
  
  24,525
  
  32,101
  
  35,540  In 2001, TAMCO entered into a swap agreement
intended to hedge natural gas used in its manufacturing process. The Company
recognized $2,687,000 in accumulated other comprehensive loss during 2001,
which represents its proportionate share of amounts recognized by TAMCO to
record the fair value of the swap agreement at November 30, 2001.  The amount of investments and accumulated
equity in the undistributed earnings, net of reserves, in the Middle Eastern
joint ventures was $5,479,000 at November 30, 2001 and 2000.  34 
   Sales and technical services provided by the
Company to joint ventures in the Middle East totaled approximately $7,000,000
in 2001, $7,100,000 in 2000 and $5,100,000 in 1999, and related receivables
aggregated approximately $1,100,000 at November 30, 2001 and $1,700,000 at
November 30, 2000. The Company has 25% ownership in Amercoat Mexicana, which
has been accounted for by the cost method since the Company does not have the
ability to exert significant influence over Amercoat Mexicanas operating and
financing activities.  The Company guaranteed $4,692,000 of bank
credit facilities for Bondstrand, Ltd. at November 30, 2001.  NOTE 6Other Assets Other assets were as follows at November 30:  2001
  
  2000(In
  thousands)Cash surrender value of insurance policies
  
  $
  24,734
  
  $
  22,767Prepaid pension benefit cost
  
  14,967
  
  10,279Other
  
  1,932
  
  492$
  41,633
  
  $
  33,538  NOTE 7Accrued Liabilities Accrued liabilities were as follows at
November 30:  2001
  
  2000(In
  thousands)Compensation and benefits
  
  $
  15,864
  
  $
  16,581Self-insurance reserves
  
  14,223
  
  12,620Reserves for pending claims and litigation
  
  8,227
  
  13,744Taxes (other than income taxes)
  
  3,434
  
  3,976Commissions and royalties
  
  1,190
  
  1,378Interest
  
  1,007
  
  4,171Advances from customers
  
  181
  
  1,935Other
  
  3,360
  
  3,860$
  47,486
  
  $
  58,265  NOTE 8Other Long-Term Liabilities Other long-term liabilities were as follows
at November 30:  2001
  
  2000(In
  thousands)Compensation and benefits
  
  $
  20,295
  
  $
  16,240Deferred income tax liabilities
  
  13,690
  
  9,303Other
  
  433
  
  1,414$
  34,418
  
  $
  26,957  NOTE 9Income Taxes The provision for income taxes included the
following for the years ended November 30:  2001
  
  2000
  
  1999(In
  thousands)CurrentFederal
  
  $
  67
  
  $
  1,231
  
  $
  4,932Foreign
  
  2,402
  
  2,730
  
  5,132State
  
  (484
  )
  757
  
  2,0771,985
  
  4,718
  
  12,141DeferredFederal
  
  7,436
  
  2,650
  
  (1,092
  )Foreign
  
  36
  
  583
  
  (362
  )State
  
  1,393
  
  497
  
  (205
  )8,865
  
  3,730
  
  (1,659
  )$
  10,850
  
  $
  8,448
  
  $
  10,482  Deferred income tax assets consisted of the following
as of November 30:  2001
  
  2000(In
  thousands)Noncurrent deferred income taxesCompensation and benefits
  
  $
  6,536
  
  $
  6,119Net operating loss carryovers
  
  7,418
  
  4,401Investments
  
  3,243
  
  6,485Property, plant and equipment
  
  (16,373
  )
  (15,447
  )Prepaid pension benefit cost
  
  (5,836
  )
  (4,003
  )Other
  
  (571
  )
  (2,438
  )Valuation allowance
  
  (8,107
  )
  (4,420
  )Net noncurrent deferred income tax liabilities
  
  (13,690
  )
  (9,303
  )Current deferred income taxesInventories
  
  4,432
  
  5,716Receivables
  
  1,762
  
  1,775Compensation and benefits
  
  2,969
  
  3,018Self-insurance/claims reserves
  
  11,373
  
  13,933Other
  
  (33
  )
  342Valuation allowance
  
  (1,261
  )
  (1,064
  )Net current deferred income tax assets
  
  19,242
  
  23,720Net deferred income tax assets
  
  $
  5,552
  
  $
  14,417  As of November 30, 2001, the Company had
foreign net operating loss carryovers of approximately $22.1 million.  The tax provision represents effective tax
rates of 28%, 25% and 32% of income before income taxes for the years ended
November 30, 2001, 2000 and 1999, respectively. A reconciliation of income
taxes provided at the effective income tax rate and the amount computed at the
federal statutory income tax rate of 35% is as follows for the years ended
November 30:  2001
  
  2000
  
  1999(In
  thousands)Domestic pretax income
  
  $
  39,146
  
  $
  24,734
  
  $
  26,893Foreign pretax income
  
  (555
  )
  9,059
  
  5,862$
  38,591
  
  $
  33,793
  
  $
  32,755Taxes at federal statutory rate
  
  $
  13,507
  
  $
  11,828
  
  $
  11,465State taxes (net of federal tax benefit)
  
  1,701
  
  1,031
  
  1,282Foreign losses with no federal benefit
  
  3,669
  
  2,454
  
  3,446Foreign income taxed at lower rates
  
  (1,575
  )
  (2,338
  )
  (2,270
  )Foreign tax credit
  
  (2,004
  )
  (2,400
  )
  (1,457
  )Foreign branch and withholding taxes
  
  999
  
  896
  
  1,705Equity in earnings of joint ventures
  
  (638
  )
  (2,235
  )
  (1,676
  )Percentage depletion
  
  (382
  )
  (331
  )
  (387
  )Research and development credits
  
  (4,008
  )
  
  
  Other, net
  
  (419
  )
  (457
  )
  (1,626
  )$
  10,850
  
  $
  8,448
  
  $
  10,482  In 1996, the Internal Revenue Service (IRS)
completed the examination of the Companys 1990 through 1992 federal income tax
returns, and issued an assessment. The Company agreed and paid the tax on a
portion of the assessment, and filed an appeal with respect to the portion that
was in dispute. In 1999, a portion of the disputed items was settled. The
remaining disputes were settled in 2001. The related adjustment was not
material to the Companys financial statements.  In 2001, the IRS completed the examination of
the Companys 1993 through 1995 federal income tax returns and issued an
assessment.  35 
   The Company agreed with the IRS regarding the
assessment. The assessment was not material to the Companys financial
statements and has been included in income taxes payable.  The 1996 through 1998 federal income tax
returns are currently under examination by the IRS. No assessments have been
issued to date. Although it cannot predict with certainty the ultimate outcome
of this examination, the Company believes it has adequately provided for any
potential liabilities that may result.  In 2001, the Company filed federal and state
income tax claims for research and development credits for tax years 1990
through 2000. The claims are subject to IRS audit.  NOTE 10Debt Short-term borrowings consisted of loans
payable under bank credit lines totaling $4,080,000 and $5,001,000 as of
November 30, 2001 and 2000, respectively. At November 30, 2001, $11,920,000 was
available under these short-term credit lines. The effective interest rates on
these loans were approximately 13.35% at November 30, 2001 and 17.11% at
November 30, 2000. The high interest rates were related to borrowings by the
Companys Colombian subsidiary.  Domestically, the Company has uncommitted,
short-term bank credit lines totaling $9,500,000 with interest at various money
market rates. The Company also maintains a $150,000,000 revolving credit
facility with six banks (the Revolver). Under the Revolver, the Company may,
at its option, borrow at interest rates based on specified margins over money
market rates, at any time until April 2003, when all borrowings under the
Revolver must be repaid. At November 30, 2001,
$78,400,000 was borrowed under these facilities.  The Company also maintains revolving credit
facilities and short-term facilities with foreign banks. The Company may borrow
in various currencies, at interest rates based upon specified margins over
money market rates. The Company is able to borrow up to the equivalent of
$5,400,000 at any time through March 2002 under one facility. A second
arrangement permits borrowings up to $3,500,000, at any time through June 2004.
Other short-term lines permit borrowings up to $7,700,000. At November 30,
2001, $9,764,000 was borrowed under these facilities.  Borrowings under certain bank facilities are
supported by the Revolver and, accordingly, have been classified as long-term
debt and are considered payable when the Revolver is due.  Long-term debt consisted of the following as
of November 30:  2001
  
  2000(In
  thousands)Fixed-rate unsecured notes payable: 7.92%, payable in annual
  principal 
  installments of $8,333
  
  $
  41,666
  
  $
  50,000Variable-rate industrial development bonds:payable in 2016 (1.65% at November 30, 2001)
  
  7,200
  
  7,200payable in 2021 (1.80% at November 30, 2001)
  
  8,500
  
  Variable-rate unsecured bank revolving credit facilities (2.84% at
  November 30, 2001)
  
  84,910
  
  91,594Variable-rate unsecured bank loan, payable in 2004 (18.67% at
  November 30, 2001)
  
  3,254
  
  Variable-rate unsecured bank loan, payable in Dutch guilders, with
  annual principal installments of $264 (4.31% at November 30, 2001)
  
  264
  
  772145,794
  
  149,566Less current portion
  
  (8,597
  )
  (8,848
  )$
  137,197
  
  $
  140,718  Future maturities of long-term debt were as
follows as of November 30, 2001:  Year
  ending November 30,
  
  Amount(In
  thousands)2002
  
  $
  8,5972003
  
  93,2432004
  
  11,5882005
  
  8,3332006
  
  8,333Thereafter
  
  15,700$
  145,794  The lending agreements contain various
restrictive covenants, including the requirement to maintain specified amounts
of net worth and restrictions on cash dividends, borrowings, liens, investments
and guarantees. Under the most restrictive provisions of the Companys lending
agreements, approximately $15,035,000 of retained earnings was not restricted
at November 30, 2001, as to the declaration of cash dividends or the repurchase
of Company stock. At November 30, 2001, the Company was in compliance with all
covenants.  Certain note agreements
contain provisions regarding the Companys ability to grant security interests
or liens in association with other debt instruments. If the Company grants such
a security interest or lien, then such notes will be secured equally and
ratably as long as such other debt shall be secured.  Interest income and expense were as follows
for the years ended November 30:  2001
  
  2000
  
  1999(In
  thousands)Interest expense
  
  $
  10,471
  
  $
  12,814
  
  $
  13,153Interest income
  
  (258
  )
  (570
  )
  (215
  )Interest expense, net
  
  $
  10,213
  
  $
  12,244
  
  $
  12,938  The following disclosure of the estimated
fair value of the Companys debt is made in accordance with the requirements of
SFAS 107, Disclosures about Fair Value of Financial Instruments. The
estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies.
Considerable judgment is required to develop the estimates of fair value, thus
the estimates provided herein are not necessarily indicative of the amounts
that could be realized in a current market exchange.  Carrying
  Amount
  
  Fair Value(In
  thousands)November 30, 2001Short-term borrowings
  
  $
  4,080
  
  $
  4,080Fixed-rate, long-term debt
  
  41,666
  
  43,656Variable-rate, long-term debt
  
  104,128
  
  104,128November 30, 2000Short-term borrowings
  
  5,001
  
  5,001Fixed-rate, long-term debt
  
  50,000
  
  50,877Variable-rate, long-term debt
  
  99,566
  
  99,566  The estimated fair value of the Companys
variable-rate debt approximates the carrying value of the debt since the
variable interest rates are market-based, and the Company believes such debt
could be refinanced on materially similar terms. The estimated fair value of
the Companys fixed-rate, long-term debt is based on U.S. government notes at
November 30, 2001 plus an estimated spread for similar securities with similar
remaining maturities.  36 
   NOTE 11Lease Commitments The Company leases
facilities and equipment under non-cancelable operating leases. Rental expense
under long-term operating leases of property, vehicles and other equipment was
$5,687,000 in 2001, $5,635,000 in 2000 and $5,355,000 in 1999. At November 30,
2001, future rental commitments under these leases totaled $41,013,000. Future
rental commitments were payable as follows as of November 30, 2001:  Year
  ending November 30,
  
  Amount(In
  thousands)2002
  
  $
  4,8642003
  
  4,1752004
  
  3,4832005
  
  2,6092006
  
  1,752Thereafter
  
  24,130$
  41,013  Future rental commitments for leases have not
been reduced by minimum non-cancelable sublease rentals aggregating $2,124,000.  NOTE 12Incentive Stock Compensation Plans The Company applies Accounting Principles
Board Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations in accounting for its various stock option plans. The Company
has adopted the disclosure only provisions of SFAS 123, Accounting for
Stock-Based Compensation.  On March 21, 2001, the 2001 Stock Incentive
Plan (2001 Plan) was approved by the stockholders of the Company. The 2001
Plan serves as the successor to both the 1992 Incentive Stock Compensation Plan
and the 1994 Non-Employee Director Stock Option Plan and supercedes those
plans. Under the terms of the 2001 Plan, 190,000 new shares of common stock
were made available for awards both to non-employee directors and to key
employees of the Company. Awards to key employees may include, but are not
limited to, stock options, restricted stock, performance shares and performance
unit awards, however, no more than 40,000 of such shares were made available
for issuance as either restricted stock, performance stock, performance shares
or performance units. With respect to non-employee directors, on the first
business day following the date of the annual meeting of stockholders of the
Company, each non-employee director will receive an option to purchase 1,500
shares of common stock.  At November 30, 2001, the Company had 597,259
non-qualified stock options outstanding with terms of from 10 to 18 years from
the date of grant, and 179,500 shares available for future grants under the
2001 plan. The exercise price for such outstanding stock options is generally
the fair market value of the Companys stock on the date of the original grant.
Such options vest in equal annual installments over four years. Certain options
have a cashless exercise feature. In 2001, the Company recognized stock
compensation expense of $1,480,000, including $843,000 related to options with
the cashless exercise feature and $637,000 related to an extension of the life
of certain stock options.  SFAS 123 requires pro forma information
regarding net income and earnings per share as if compensation cost for stock
options had been determined based on the fair value of the options on the grant
date. The Company estimates the fair value of stock options at the grant date
by using the Black Scholes option pricing model with the following weighted
average assumptions used for grants in 1999, 2000 and 2001, respectively:
dividend yields of 2.60%, 3.02% and 3.47%; an expected volatility of 17.0%,
30.2% and 25.5%; risk-free rates of 4.62%, 6.61%, and 4.90%; and an expected
life of five years for all years.  Under the accounting provisions of SFAS 123,
the Companys net income and earnings per share would have been computed as
indicated below for the years ended November 30:  2001
  
  2000
  
  1999(In
  thousands, except per share data)Net incomeAs reported
  
  $
  27,741
  
  $
  25,345
  
  $
  22,273Pro forma
  
  27,520
  
  24,684
  
  21,734Earnings per share (diluted)As reported
  
  6.89
  
  6.41
  
  5.54Pro forma
  
  6.84
  
  6.25
  
  5.40  A summary of the Companys stock options as
of November 30, 1999, 2000 and 2001, and changes during the years then ended,
follows:  Number of Options
  
  Weighted
  Average Exercise PriceOutstanding at December 1, 1998
  
  368,484
  
  $
  43.40Granted
  
  58,500
  
  37.78Exercised
  
  
  
  Forfeited
  
  (6,575
  )
  46.32Outstanding at November 30, 1999
  
  420,409
  
  42.57Options exercisable at November 30, 1999
  
  254,034
  
  40.14Weighted average fair value of options granted during 1999
  
  
  
  10.25Outstanding at November 30, 1999
  
  420,409
  
  42.57Granted
  
  84,500
  
  38.44Exercised
  
  
  
  Forfeited
  
  (1,000
  )
  39.13Outstanding at November 30, 2000
  
  503,909
  
  41.89Options exercisable at November 30, 2000
  
  325,784
  
  41.29Weighted average fair value of options granted during 2000
  
  
  
  11.11Outstanding at November 30, 2000
  
  503,909
  
  41.89Granted
  
  102,500
  
  41.10Exercised
  
  (3,650
  )
  35.50Forfeited
  
  (5,500
  )
  50.27Outstanding at November 30, 2001
  
  597,259
  
  41.72Options exercisable at November 30, 2001
  
  385,009
  
  41.96Weighted average fair value of options granted during 2001
  
  
  
  8.70  The following summarizes information about
stock options outstanding as of November 30, 2001:  Range of Exercise Prices
  
  
  
  
  
  Options
  Outstanding at November 30, 2001
  
  Weighted
  Averag Remaining Contractual Life (in years)
  
  Weighted
  Average Exercise Price$
  25.00
  
  to
  
  $
  35.00
  
  54,950
  
  7.04
  
  $
  32.9035.00
  
  to
  
  45.00
  
  415,809
  
  8.81
  
  39.2245.00
  
  to
  
  55.00
  
  52,000
  
  8.32
  
  48.9655.00
  
  to
  
  65.00
  
  74,500
  
  8.78
  
  57.0825.00
  
  to
  
  65.00
  
  597,259
  
  8.60
  
  41.72  Range of Exercise Prices
  
  
  
  
  
  Options
  Exercisable at November 30, 2001
  
  Weighted
  Average Exercise Price$
  25.00
  
  to
  
  $
  35.00
  
  44,075
  
  $
  32.6535.00
  
  to
  
  45.00
  
  243,559
  
  38.8545.00
  
  to
  
  55.00
  
  41,500
  
  49.7555.00
  
  to
  
  65.00
  
  55,875
  
  57.0825.00
  
  to
  
  65.00
  
  385,009
  
  41.96  37 
   NOTE 13Commitments and Contingencies An action was filed in 1992 in the U.S.
District Court for the District of Arizona by the Central Arizona Water
Conservation District (CAWCD) seeking damages against several parties,
including the Company and the Companys customer, Peter Kiewit Sons Company
(Kiewit), in connection with six prestressed concrete pipe siphons furnished
and installed in the 1970s as part of the Central Arizona Project (CAP), a
federal project to bring water from the Colorado River to Arizona. The CAWCD
also filed separate actions against the U.S. Bureau of Reclamation (USBR) in
the U.S. Court of Claims and with the Arizona Projects Office of the USBR in
connection with the CAP siphons. The CAWCD alleged that the six CAP siphons
were defective and that the USBR and the defendants in the U.S. District Court
action were liable for damages for the repair or replacement of those siphons.
On September 14, 1994, the U.S. District Court granted the Companys motion to
dismiss the CAWCD action and entered judgment against the CAWCD and in favor of
the Company and its co-defendants. CAWCD filed a notice of appeal with the
Ninth Circuit Court of Appeals.  Separately, on September 28, 1995, the
Contracting Officer for the USBR issued a final decision claiming for the USBR
approximately $40 million in damages against Kiewit, based in part on the
Contracting Officers finding that the siphons supplied by the Company were
defective. That claim amount is considered by the Company to be duplicative of
the damages sought by the CAWCD for the repair or replacement of the siphons in
the aforementioned action in the U.S. District Court for the District of
Arizona. The Contracting Officers final decision was appealed by Kiewit to the
U.S. Department of the Interior Board of Contract Appeals (IBCA). The Company
is actively cooperating with and assisting Kiewit in the administrative appeal
of that final decision before the IBCA. Trial on that appeal commenced in
November 2000; however, the proceeding was stayed with the concurrence of the
parties pending efforts aimed at a possible settlement of the matter.
Settlement efforts involving the USBR, Kiewit, the Company and various
insurance carriers are continuing. In the meantime, activity on the IBCA
appeal, as well as the aforementioned CAWCD appeal, continues to be suspended.  The Company internally, as well as through
independent third-party consultants, has conducted engineering analysis
regarding the allegations that the CAP siphons were defective, and believes
that the siphons were manufactured in accordance with the project
specifications and other contract requirements; and, therefore, it is not
liable for any claims relating to the siphons, whether by the CAWCD or by the
USBR. The Company believes that it has meritorious defenses to these actions
and that resultant liability, if any, should not have a material effect on the
financial position of the Company or its results of operations.  In addition, certain other claims, suits and
complaints that arise in the ordinary course of business, have been filed or
are pending against the Company. Management believes that these matters, and
the matters discussed above, are either adequately reserved, covered by
insurance, or would not have a material effect on the Companys financial position
or its results of operations if disposed of unfavorably.  The Company is also subject to federal, state
and local laws and regulations concerning the environment and is currently
participating in administrative proceedings at several sites under these laws.
In the early 1970s, the Company disposed of certain quantities of waste at the
Stringfellow Hazardous Waste Site in Riverside County, California, which is one
of several priority sites on the Superfund list established by the U.S.
Environmental Protection Agency. During 2001 the Company settled the only
current action against it in connection with the remediation of that site. The
settlement did not have a material impact on the Companys financial position
or its results of operations. While the Company finds it difficult to estimate
with any certainty the total cost of remediation at the several sites, on the
basis of currently available information and reserves provided, the Company
believes that the outcome of such environmental regulatory proceedings will not
have a material effect on the Companys financial position or its results of
operations.  38 
   NOTE 14Employee Benefit Plans  The Company has a qualified, defined benefit,
noncontributory pension plan for U.S. employees not covered by union pension
plans. Benefits paid to retirees are based upon age at retirement, years of
credited service and average compensation or negotiated benefit rates. The
Companys funding policy is to make contributions to the plan sufficient to
meet the minimum funding requirements of applicable laws and regulations, plus
such additional amounts, if any, as the Companys actuarial consultants
recommend. During 1999, the Company adopted SFAS 132, Employers Disclosures about
Pensions and Postretirement Benefits, which standardizes the disclosure
requirements for pension and other postretirement benefits. SFAS 132 addresses
disclosure only. It does not address liability measurement or expense
recognition.  Assets of the defined benefit plan are
invested in a directed trust. Assets in the trust are invested in domestic and
foreign equity securities of corporations (including $5,380,000 of the
Companys common stock at November 30, 2001), U.S. government obligations, derivative
securities, corporate bonds and money market funds.  The Company has a supplemental non-qualified,
non-funded retirement plan, for which the Company has purchased cost recovery
life insurance on the lives of the participants. The Company is the sole owner
and beneficiary of such policies. As of November 30, 2001 and 2000, the cash
surrender value of these policies was $8,339,000 and $8,012,000, respectively.  The following set forth the change in benefit
obligations, change in plan assets, funded status and amounts recognized in the
balance sheet as of November 30, 2001 and 2000 for the Companys defined
benefit retirement plan and supplemental retirement plan:  Defined
  Benefit Retirement Plan
  
  Supplemental
  Retirement Plan2001
  
  2000
  
  2001
  
  2000(In thousands)Change in Benefit ObligationProjected benefit obligation
  beginning of year
  
  $
  127,557
  
  $
  126,364
  
  $
  6,332
  
  $
  5,907Service cost
  
  2,002
  
  2,036
  
  287
  
  366Interest cost
  
  9,625
  
  9,267
  
  543
  
  435Benefit adjustments
  
  
  
  
  
  1,562
  
  Actuarial loss (gain)
  
  7,297
  
  (1,391
  )
  374
  
  (100
  )Benefit payments
  
  (9,129
  )
  (8,719
  )
  (276
  )
  (276
  )Projected benefit obligationend of year
  
  $
  137,352
  
  $
  127,557
  
  $
  8,822
  
  $
  6,332Change in Plan AssetsPlan assets at fair valuebeginning of year
  
  $
  161,930
  
  $
  157,281
  
  $
  
  
  $
  Actual return on plan assets
  
  (17,630
  )
  13,368
  
  
  
  Employer contribution
  
  
  
  
  
  276
  
  276Benefit payments
  
  (9,129
  )
  (8,719
  )
  (276
  )
  (276
  )Plan assets at fair valueend of year
  
  $
  135,171
  
  $
  161,930
  
  $
  
  
  $
  Funded StatusFunded status
  
  $
  (2,181
  )
  $
  34,373
  
  $
  (8,822
  )
  $
  (6,332
  )Unrecognized actuarial loss (gain)
  
  16,940
  
  (24,322
  )
  1,140
  
  787Unrecognized transition asset
  
  (36
  )
  (151
  )
  
  
  Unrecognized prior service cost
  
  244
  
  379
  
  1,424
  
  109Net amount recognized
  
  $
  14,967
  
  $
  10,279
  
  $
  (6,258
  )
  $
  (5,436
  )Balance Sheet AmountsPrepaid benefit cost
  
  $
  14,967
  
  $
  10,279
  
  $
  
  
  $
  Accrued benefit liability
  
  
  
  
  
  (7,191
  )
  (5,436
  )Intangible asset
  
  
  
  
  
  933
  
  Net amount recognized
  
  $
  14,967
  
  $
  10,279
  
  $
  (6,258
  )
  $
  (5,436
  )  Net periodic benefit costs for the Companys
defined benefit retirement plan and supplemental retirement plan for 2001, 2000
and 1999 included the following components:  Defined
  Benefit Retirement Plan
  
  Supplemental
  Retirement Plan2001
  
  2000
  
  1999
  
  2001
  
  2000
  
  1999(In thousands)Service cost
  
  $
  2,002
  
  $
  2,036
  
  $
  2,263
  
  $
  287
  
  $
  366
  
  $
  367Interest cost
  
  9,625
  
  9,267
  
  8,511
  
  543
  
  435
  
  373Expected return on plan assets
  
  (15,343
  )
  (14,910
  )
  (14,389
  )
  
  
  
  
  Amortization of unrecognized prior service cost
  
  135
  
  142
  
  220
  
  247
  
  131
  
  131Amortization of unrecognized net transition asset
  
  (115
  )
  (115
  )
  (115
  )
  
  
  
  
  Amortization of accumulated loss (gain)
  
  (992
  )
  (1,208
  )
  
  
  21
  
  74
  
  208Net periodic (benefit) cost
  
  $
  (4,688
  )
  $
  (4,788
  )
  $
  (3,510
  )
  $
  1,098
  
  $
  1,006
  
  $
  1,079  39 
   The following table provides the weighted
average assumptions used to compute the actuarial present value of projected
benefit obligations:  Defined
  Benefit Retirement Plan
  
  Supplemental
  Retirement Plan2001
  
  2000
  
  1999
  
  2001
  
  2000
  
  1999Weighted average discount rate
  
  7.25
  %
  7.75
  %
  7.50
  %
  7.25
  %
  7.75
  %
  7.50
  %Expected long-term rate of return on plan assets
  
  9.75
  %
  9.75
  %
  9.75
  %
  N/A
  
  N/A
  
  N/ARate of increase in compensation levels
  
  4.75
  %
  5.25
  %
  5.00
  %
  4.75
  %
  5.25
  %
  5.00
  %  Approximately 17% of the Companys employees
are covered by union-sponsored, collectively-bargained, multi-employer pension
plans. Related to these plans, the Company contributed and charged to expense
$4,009,000, $2,800,000 and $1,800,000 in 2001, 2000 and1999, respectively.
These contributions are determined in accordance with the provisions of
negotiated labor contracts and generally are based on the number of hours
worked. The Company has no intention of withdrawing from any of these plans,
nor is there any intention to terminate such plans.  The Company provides health and life
insurance benefits to a limited number of eligible retirees and eligible
survivors of retirees. These benefits are unfunded. For these plans, changes in
the Companys benefit obligation, funded status and amounts recognized in the
balance sheet as of November 30, 2001 and 2000 were as follows:  Salaried
  Beneflex
  
  Union
  Medical
  
  Executive
  Life Insurance2001
  
  2000
  
  2001
  
  2000
  
  2001
  
  2000(In
  thousands)Change in Benefit ObligationProjected benefit obligationbeginning of year
  
  $
  312
  
  $
  256
  
  $
  966
  
  $
  938
  
  $
  1,054
  
  $
  979Service cost
  
  17
  
  12
  
  52
  
  43
  
  24
  
  22Interest cost
  
  20
  
  22
  
  79
  
  71
  
  85
  
  75Actuarial loss (gain)
  
  (47
  )
  40
  
  48
  
  8
  
  90
  
  26Benefit payments
  
  (30
  )
  (18
  )
  (45
  )
  (94
  )
  (50
  )
  (48
  )Projected benefit obligationend of year
  
  $
  272
  
  $
  312
  
  $
  1,100
  
  $
  966
  
  $
  1,203
  
  $
  1,054Funded StatusFunded status
  
  $
  (272
  )
  $
  (312
  )
  $
  (1,100
  )
  $
  (966
  )
  $
  (1,203
  )
  $
  (1,054
  )Unrecognized actuarial loss (gain)
  
  (39
  )
  7
  
  286
  
  250
  
  143
  
  57Unrecognized transition obligation
  
  197
  
  214
  
  305
  
  330
  
  354
  
  383Net amount recognized
  
  $
  (114
  )
  $
  (91
  )
  $
  (509
  )
  $
  (386
  )
  $
  (706
  )
  $
  (614
  )Balance Sheet AmountsAccrued benefit liability
  
  $
  (114
  )
  $
  (91
  )
  $
  (509
  )
  $
  (386
  )
  $
  (706
  )
  $
  (614
  )  Net periodic benefit costs included the
following:  Salaried
  Beneflex
  
  Union
  Medical
  
  Executive
  Life Insurance2001
  
  2000
  
  1999
  
  2001
  
  2000
  
  1999
  
  2001
  
  2000
  
  1999(In
  thousands)Service cost
  
  $
  17
  
  $
  12
  
  $
  18
  
  $
  52
  
  $
  43
  
  $
  60
  
  $
  24
  
  $
  22
  
  $
  26Interest cost
  
  20
  
  23
  
  18
  
  79
  
  71
  
  63
  
  85
  
  75
  
  69Amortization of unrecognized net transition obligation
  
  17
  
  17
  
  17
  
  25
  
  25
  
  25
  
  29
  
  29
  
  29Amortization of accumulated loss (gain)
  
  (1
  )
  
  
  
  
  12
  
  13
  
  22
  
  4
  
  
  
  12Net periodic benefit cost
  
  $
  53
  
  $
  52
  
  $
  53
  
  $
  168
  
  $
  152
  
  $
  170
  
  $
  142
  
  $
  126
  
  $
  136  Weighted average assumptions were as follows:  Salaried
  Beneflex
  
  Union
  Medical
  
  Executive
  Life Insurance2001
  
  2000
  
  1999
  
  2001
  
  2000
  
  1999
  
  2001
  
  2000
  
  1999Weighted average discount rate
  
  7.25
  %
  7.75
  %
  7.50
  %
  7.25
  %
  7.75
  %
  7.50
  %
  7.25
  %
  7.75
  %
  7.50
  %Rate of increase in compensation levels
  
  N/A
  
  N/A
  
  N/A
  
  N/A
  
  N/A
  
  N/A
  
  4.75
  %
  5.25
  %
  5.00
  %  The assumed health care cost trend used in
measuring the projected benefit obligation for the Union Medical Plan was 10%
in 2001; it is assumed that the rate will decline gradually to 5% by 2006. The
effect of a one-percentage-point change in the assumed health care cost trend
would have altered the amounts of the benefit obligation and the sum of the
service cost and interest cost components of postretirement benefit expense for
2001, as follows:  Increase
  
  Decrease(In
  thousands)Effect on total of service and interest cost components of net
  periodic expense
  
  $
  15
  
  $
  (15
  )Effect on postretirement benefit obligation
  
  114
  
  (100
  )  40 
   The Company has a deferred compensation plan
providing eligible executives with the opportunity to participate in an
unfunded, deferred compensation program. Under the program, participants may
defer base compensation and bonuses and earn interest on their deferred
amounts. The program is not qualified under Section 401 of the Internal Revenue
Code. The total of participant deferrals and earnings thereon was $8,776,000 at
November 30, 2001 and $7,842,000 at November 30, 2000. The participant
deferrals earn interest at a rate based on U.S. government rates. The interest
expense related to this plan was $667,000 in 2001, $616,000in 2000 and $603,000 in 1999.  The Company has a life insurance plan which
provides eligible executives with life insurance protection based upon three
times base salary. Upon retirement, the executive is provided with life
insurance protection based upon final base salary. Benefits may be paid as a
lump sum or as an annual income to the identified survivor over ten years. The
expense related to this plan was $230,000 in 2001, $287,000 in 2000 and
$371,000 in 1999.  In connection with the above two plans, whole
life insurance contracts were purchased on the related participants. At
November 30, 2001 and 2000, the cash surrender value of these policies was
$16,395,000 and $14,755,000, respectively, net of loans of $1,000,000 each
year.  The Company provides to certain employees a
savings plan under Section 401(k) of the Internal Revenue Code. The savings
plan allows for deferral of income up to a certain percentage through
contributions to the plan and within certain restrictions. Company matching
contributions are in the form of cash. In 2001, 2000 and 1999, the Company
recorded expense for matching contributions of $883,000, $833,000 and $616,000,
respectively.  41 
   NOTE 15Capital Stock  The Company is incorporated in Delaware. The
articles of incorporation authorize 12,000,000 shares of $2.50 par value common
stock, 1,000,000 shares of $1.00 par value preferred stock and 100,000 shares
of $1.00 par value series A junior participating cumulative preferred stock.
The preferred stock may be issued in series, with the rights and preferences of
each series to be established by the Board of Directors. As of November 30,
2001, the Company had no shares of preferred stock or series A junior
participating cumulative preferred stock outstanding.  The Company has a Stockholders Rights Plan,
which, among other things, entitles stockholders to purchase common stock at a
significant discount if a party acquires 15% or more of the Companys common
stock or announces a tender offer for at least 15% of its common stock outstanding.  NOTE 16 Quarterly Financial Data(Unaudited)  Summarized quarterly financial data for the
years ended November 30, 2001 and 2000, follow:  First
  
  Second
  
  Third
  
  FourthQuarter
  
  Quarter
  
  Quarter
  
  Quarter(In
  thousands, except per share data)2001Sales
  
  $
  121,605
  
  $
  143,670
  
  $
  144,864
  
  $
  141,257Gross profit
  
  29,899
  
  34,766
  
  36,510
  
  36,909Net income
  
  1,580
  
  7,074
  
  8,370
  
  10,717Diluted net incomeper share
  
  0.41
  
  1.78
  
  2.09
  
  2.62Stock price per sharehigh
  
  46.85
  
  73.49
  
  77.87
  
  74.20Stock price per sharelow
  
  34.06
  
  45.85
  
  54.25
  
  48.25Dividends per share
  
  0.32
  
  0.32
  
  0.32
  
  0.322000Sales
  
  $
  121,365
  
  $
  140,171
  
  $
  133,094
  
  $
  156,031Gross profit
  
  28,053
  
  37,196
  
  32,814
  
  41,729Net income
  
  951
  
  6,189
  
  7,981
  
  10,224Diluted net incomeper share
  
  0.24
  
  1.55
  
  2.02
  
  2.60Stock price per sharehigh
  
  43.00
  
  39.63
  
  40.19
  
  37.56Stock price per sharelow
  
  34.50
  
  32.19
  
  33.50
  
  34.13Dividends per share
  
  0.32
  
  0.32
  
  0.32
  
  0.32  The Company traditionally experiences lower
sales during the first fiscal quarter because of seasonal patterns associated
with weather and contractor schedules.  NOTE 17Segment Information  In 1999, the Company adopted SFAS 131,
Disclosure about Segments of an Enterprise and Related Information. SFAS 131
requires disclosure of certain information about operating segments, geographic
areas in which the Company operates, major customers, and products and
services. In accordance with SFAS 131, the Company has determined it has four
operating segments. The Performance Coatings & Finishes Group manufactures
and markets high-performance industrial and marine coatings. The
Fiberglass-Composite Pipe Group manufactures and markets filament-wound and
molded composite fiberglass pipe, tubing, fittings and well screens. The Water
Transmission Group manufactures and supplies concrete and steel pressure pipe,
concrete non-pressure pipe, protective linings for pipe, and fabricated
products. The Infrastructure Products Group manufactures and sells ready-mix
concrete, sand and aggregates, concrete pipe and culverts, and concrete and
steel lighting and traffic poles. Each of these segments has a dedicated
management team and is managed separately, primarily because of differences in
products.  The markets served by the Performance
Coatings & Finishes Group and the Fiberglass-Composite Pipe Group are
worldwide in scope. The Water Transmission Group serves primarily the western
United States. The Infrastructure Products Group operates exclusively in the
State of Hawaii and the continental United States. Sales for export or to any
individual customer did not exceed 10% of consolidated sales in 2001, 2000 or
1999.  In accordance with SFAS 131, the following
table presents information related to each operating segment included in, and
in a manner consistent with, internal management reports. The Company allocates
certain selling, general and administrative expenses to operating segments
utilizing assumptions believed to be appropriate in the circumstances.  Inter-segment sales were not significant.
Income from reportable segments is exclusive of certain unallocated income and
expense, interest expense and income taxes. Total assets by segment are those
assets that are used exclusively by such segment. Unallocated assets are
principally cash, corporate property and equipment, and investments.  42 
   Segment InformationPerformance Coatings & Finishes
  
  Fiberglass- Composite Pipe
  
  Water Transmission
  
  Infrastructure Products
  
  Other
  
  Eliminations
  
  Total(In
  thousands)2001Sales
  
  $
  188,759
  
  $
  106,872
  
  $
  143,226
  
  $
  113,824
  
  $
  
  
  $
  (1,285
  )
  $
  551,396Income before interest and income taxes
  
  9,831
  
  12,125
  
  29,011
  
  13,089
  
  (15,252
  )
  
  
  48,804Equity income
  
  320
  
  2,070
  
  3,325
  
  
  
  2,279
  
  
  
  7,994Investment, advances and
  equity in undistributed earnings of joint ventures
  
  2,203
  
  3,784
  
  
  
  
  
  12,793
  
  
  
  18,780Long-lived assets
  
  45,240
  
  28,140
  
  41,146
  
  40,474
  
  45,592
  
  
  
  200,592Total assets
  
  133,332
  
  133,267
  
  123,175
  
  65,518
  
  168,697
  
  (138,909
  )
  485,080Capital expenditures
  
  3,037
  
  5,013
  
  2,047
  
  8,596
  
  604
  
  
  
  19,297Depreciation and amortization
  
  5,448
  
  3,774
  
  4,210
  
  4,298
  
  903
  
  
  
  18,6332000Sales
  
  $
  186,767
  
  $
  103,066
  
  $
  149,384
  
  $
  112,105
  
  $
  
  
  $
  (661
  )
  $
  550,661Income before interest and income taxes
  
  6,271
  
  15,963
  
  23,083
  
  17,666
  
  (16,946
  )
  
  
  46,037Equity income
  
  531
  
  2,666
  
  3,493
  
  
  
  5,974
  
  
  
  12,664Investment, advances and equity in undistributed earnings of joint
  ventures
  
  2,203
  
  3,784
  
  
  
  
  
  15,786
  
  
  
  21,773Long-lived assets
  
  46,555
  
  26,825
  
  43,400
  
  36,153
  
  39,773
  
  
  
  192,706Total assets
  
  131,300
  
  127,904
  
  112,254
  
  61,503
  
  169,212
  
  (123,724
  )
  478,449Capital expenditures
  
  6,210
  
  5,551
  
  1,395
  
  6,951
  
  943
  
  
  
  21,050Depreciation and amortization
  
  6,073
  
  3,536
  
  4,650
  
  3,836
  
  (73
  )
  
  
  18,0221999Sales
  
  $
  199,357
  
  $
  95,524
  
  $
  142,468
  
  $
  108,559
  
  $
  
  
  $
  (827
  )
  $
  545,081Income before interest and income taxes
  
  9,185
  
  12,055
  
  23,022
  
  17,155
  
  (15,724
  )
  
  
  45,693Equity income
  
  216
  
  1,221
  
  1,211
  
  
  
  5,851
  
  
  
  8,499Investment, advances and equity in undistributed earnings of joint
  ventures
  
  2,136
  
  3,784
  
  
  
  
  
  17,126
  
  
  
  23,046Long-lived assets
  
  51,570
  
  26,795
  
  46,774
  
  33,183
  
  29,833
  
  (1,981
  )
  186,174Total assets
  
  148,436
  
  117,561
  
  100,177
  
  57,208
  
  170,679
  
  (123,492
  )
  470,569Capital expenditures
  
  6,041
  
  4,672
  
  5,259
  
  3,627
  
  73
  
  
  
  19,672Depreciation and amortization
  
  6,765
  
  3,601
  
  4,000
  
  3,755
  
  865
  
  
  
  18,986  Geographic AreasUnited States
  
  Europe
  
  Asia
  
  Other
  
  Eliminations
  
  Total(In
  thousands)2001Sales to external customers
  
  $
  413,112
  
  $
  80,277
  
  $
  28,451
  
  $
  29,556
  
  $
  
  
  $
  551,396Long-lived assets
  
  151,290
  
  26,617
  
  10,986
  
  11,699
  
  
  
  200,592Total assets
  
  456,171
  
  81,148
  
  59,196
  
  27,474
  
  (138,909
  )
  485,0802000Sales to external customers
  
  $
  387,494
  
  $
  79,855
  
  $
  36,080
  
  $
  47,232
  
  $
  
  
  $
  550,661Long-lived assets
  
  141,669
  
  26,780
  
  11,823
  
  12,434
  
  
  
  192,706Total assets
  
  420,889
  
  78,371
  
  68,890
  
  34,023
  
  (123,724
  )
  478,4491999Sales to external customers
  
  $
  374,543
  
  $
  88,788
  
  $
  38,436
  
  $
  43,314
  
  $
  
  
  $
  545,081Long-lived assets
  
  130,792
  
  31,042
  
  10,309
  
  16,012
  
  (1,981
  )
  186,174Total assets
  
  409,172
  
  82,269
  
  63,498
  
  39,122
  
  (123,492
  )
  470,569  43 
   INDEPENDENT
AUDITORS REPORT  To the
Board of Directors and Stockholders of Ameron International Corporation:  We have audited the accompanying consolidated
balance sheets of Ameron International Corporation and subsidiaries (the  Company) as of November 30, 2001 and
2000, and the related consolidated statements of income, comprehensive income,
stockholders' equity and cash flows for each of the three years in the period
ended November 30, 2001. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits.  We conducted our audits in accordance with
auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.  In our opinion, such consolidated financial
statements present fairly, in all material respects, the financial position of
the Company as of November 30, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
November 30, 2001, in conformity with accounting principles generally
accepted in the United States of America.  /s/ Deloitte & Touche
  LLPLos Angeles, CaliforniaFebruary 6, 2002  MANAGEMENT'S LETTER  We have prepared the accompanying
consolidated financial statements and related financial information of Ameron
International Corporation and subsidiaries in conformity with accounting
principles generally accepted in the United States of America. Management is responsible
for the integrity of the financial information included in this Annual Report.
In preparing the financial statements, management makes estimates as necessary
based upon currently available information and judgment of current conditions
and circumstances.  Ameron maintains a system of internal
controls supported by documentation to provide reasonable assurance that assets
are safeguarded and the accounting records reflect the authorized transactions
of the Company. We believe the Companys system provides this appropriate
balance in accordance with established policies and procedures as implemented
by qualified personnel.  The independent auditors, Deloitte &
Touche LLP, appointed by the Board of Directors, are responsible for expressing
their opinion as to whether the consolidated financial statements present
fairly, in all material respects, the financial position, operating results and
cash flows of the Company.  In the
process, they consider the system of internal control, in order to determine
their auditing procedures for the purpose of expressing an opinion on the
financial statements. Their opinion appears on this page.  The Audit Committee of the Board of Directors
is composed of three directors who are not officers or employees of the
Company. They meet periodically with management, Deloitte & Touche LLP and
the internal auditors to review the audit scope and results, discuss internal
controls and financial reporting subjects, and review management actions on
these matters. Deloitte & Touche LLP and the internal auditors have full
and free access to the members of the Audit Committee.  /s/ James S. Marlen
  /s/ Gary WagnerJAMES S. MARLEN
  GARY WAGNERChairman of the Board,
  President & Chief Executive Officer
  Senior Vice President,
  Chief Financial Officer   44