<PAGE>

                  AMERON INTERNATIONAL 1998 FINANCIAL SECTION


                             1998
                                  AMERON
                          [LOGO]  INTERNATIONAL
                                  Annual Report


                        Selected Consolidated Financial Information          16
                        Management's Discussion & Analysis of
                          Financial Condition & Results of Operations        17
                        Consolidated Statements of Income                    21
                        Consolidated Balance Sheets                          22
                        Consolidated Statements of Cash Flows                24
                        Consolidated Statements of Stockholders' Equity      25
                        Consolidated Statements of Comprehensive Income      25
                        Notes to Consolidated Financial Statements           26
                        Report of Independent Public Accountants             33
                        Report of Management                                 33
                        Business Segments                                    34
                        Geographic Areas                                     35


                                       
                                  Exhibit 13
                                      23

<PAGE>

SELECTED CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                       Year ended November 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)      1998           1997           1996           1995           1994
----------------------------------------------------------------------------------------------------------------------
<S>                                           <C>            <C>            <C>            <C>            <C>
PER COMMON SHARE DATA
  Net income (Basic)                          $    5.17(1)   $    4.84      $    3.89      $    3.16      $    2.76(2)
  Net income (Diluted)                             5.08(1)        4.73           3.87           3.15           2.75(2)
  Dividends                                        1.28           1.28           1.28           1.28           1.28
  Basic average shares                        4,016,852      4,003,452      3,966,490      3,944,363      3,916,072
  Diluted average shares                      4,084,377      4,094,885      3,982,006      3,954,544      3,924,456
  Stock price - high                             64 5/8             70             50         37 7/8         43 1/8
  Stock price - low                              33 3/8         46 3/8         34 1/8             29         31 7/8
  Price/earnings ratio (range)                     13-7          15-10           13-9           12-9          16-12
----------------------------------------------------------------------------------------------------------------------
OPERATING RESULTS
  Sales                                       $ 552,146      $ 533,506      $ 496,940      $ 481,405      $ 417,682
  Gross profit                                  139,212        135,683        129,263        116,731        103,975
  Interest expense                              (15,646)       (12,433)       (11,134)       (11,715)       (11,191)
  Provision for income taxes                    (11,171)       (11,874)        (8,297)        (5,190)        (7,297)
  Net income                                     20,746(1)      19,372         15,410         12,452         10,790(2)
  Net income/sales                                  3.8%           3.6%           3.1%           2.6%           2.6%
  Return on equity                                 13.0%          13.0%          11.0%           9.6%           9.0%
----------------------------------------------------------------------------------------------------------------------
FINANCIAL CONDITION AT YEAR END
  Working capital                             $ 146,860      $ 154,027      $ 121,858      $ 114,458      $ 103,904
  Property,  plant and equipment, net           157,918        127,678        125,687        114,116        112,953
  Investments, advances and 
     equity in affiliated companies              22,182         33,777         33,722         36,197         37,315
  Total assets                                  500,219        433,225        411,666        371,381        350,856
  Long-term debt, less current portion          165,308        140,917        112,598         91,565         92,847
----------------------------------------------------------------------------------------------------------------------
CASH FLOW
  Expenditures for property, plant 
     and equipment                            $  32,744      $  24,860      $  25,227      $  16,154      $  14,934
  Depreciation and amortization                  18,699         16,676         16,445         16,226         15,995
  Business acquisitions                          46,419             --         29,032             --             --

</TABLE>


(1)  INCLUDES NET OF TAX GAIN OF $17.5 MILLION ON SALES OF ASSETS AND NET OF TAX
     CHARGES OF $14.1 MILLION ON ASSET WRITE-DOWNS AND OTHER CHARGES.
(2)  INCLUDES NET OF TAX GAIN OF $1.8 MILLION ON THE SALE OF A COLOMBIAN 
     SUBSIDIARY.
<PAGE>

AMERON 1998 FINANCIAL OVERVIEW

MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & 
RESULTS OF OPERATIONS

LIQUIDITY & CAPITAL RESOURCES

During 1998, the Company generated $38.1 million of cash from operations,
compared to $8.1 million of cash used for operations in 1997. In addition, $31.4
million was received in 1998 from the sales of assets, compared to $2.3 million
in 1997. Net borrowings for the year were $19.8 million. The funds were used for
capital expenditures of $32.7 million, acquisitions of $46.4 million and payment
of common dividends of $5.1 million. Cash and cash equivalents at November 30,
1998, totaled $16.4 million, an increase of $6.5 million from the prior year.

Cash provided by operating activities increased over the previous year due to
lower working capital requirements as a result of higher current liabilities. 
Inventories and receivables increased from last year. However, this occurred in
large part because of business acquisitions made during the year.  Inventories
and receivables purchased through acquisitions totaled $17.6 million. 

Cash used in investing activities consisted principally of business acquisitions
and capital expenditures. During the year, the Company acquired the worldwide
Croda Coatings business from U.K.-based Croda International Plc and Hope
Composites 2000, Inc., a manufacturer of fiberglass pipe and fittings in
Georgia. Both transactions totaled $46.4 million.  Capital expenditures of $32.7
million included the purchase of previously leased property in California, on
which is located the Company's largest steel pipe facility, for $9.4 million.
Remaining expenditures were primarily for the replacement and refurbishment of
machinery and equipment at existing facilities. During the fiscal year ending
November 30, 1999, 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.

Domestically the Company maintains a $150 million revolving credit facility with
five banks. At November 30, 1998, the Company had $113 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 future
operating requirements.

RESULTS OF OPERATIONS: 1998 COMPARED WITH 1997

GENERAL

Diluted earnings per share for the fiscal year ended November 30, 1998, were
$5.08 on sales of $552.1 million, compared to $4.73 per share on sales of $533.5
million in 1997. Excluding the effects of non-recurring charges and gains on
asset sales, earnings from operations were $4.25 per diluted share in 1998. 
Return on average stockholder's equity remained at 13% for both years.

SALES

Sales increased by $18.6 million to $552.1 million in 1998 primarily due to the
acquisition of Croda Coatings earlier in the year.  Partially offsetting these
increases were lower sales of the Company's traditional coatings due to the
dramatic decline in oil prices and increased competition. Deliveries of concrete
and steel pipe were also down from the prior year due to weather conditions
early in the year and the effect of a six-week strike at a major facility.

Coatings Group sales increased to $214.0 million in 1998, versus $190.7 million
in the prior year. Sales were up over last year due to the acquisition of Croda
Coatings that took place in April 1998. Through the Croda Coatings acquisition,
the Company acquired operations in the U.K., Australia and New Zealand. The
market for coatings is expected to remain soft in the near term, principally due
to depressed oil prices worldwide.

Fiberglass-Composite Pipe Group sales increased to $105.6 million in 1998,
compared to $102.7 million in 1997. The increase was attributed to the strength
in the U.S. fuel-handling market and international demand for industrial and
offshore applications that more than offset the slowdown in the worldwide
oilfield markets. Fuel handling is expected to decline in the second half of
1999. The decline should be offset by higher sales to Asia and the Middle East.

Concrete and Steel Pipe Group sales were $131.6 million in 1998, down from
$146.1 million in 1997. The decrease was due primarily to weather-related delays
that affected the timing of deliveries and to a six-week strike. Order backlog
at November 30, 1998, for this segment was $135 million, significantly higher
than at the end of 1997, when the backlog was $71.5 million. 
<PAGE>

Construction and Allied Products Group sales totaled $102.1 million in 1998,
versus $94.9 million in the prior year. The Company's construction products
business in Hawaii reported higher sales in 1998 compared to 1997 due to higher
government and military construction spending.

The economy in Hawaii is not expected to improve significantly in the near term.
Sales for the Company's Pole Products Division improved slightly in 1998. 

GROSS PROFIT

Gross profit in 1998 was $139.2 million or 25.2% of sales, compared to gross
profit of $135.7 million or 25.4% of sales in 1997. The slight decrease in gross
profit margin was attributed mainly to lower margins on sales of protective
coatings due to competitive pricing.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses totaled $109.3 million in 1998 or
19.8% of sales, compared to $103.1 million or 19.3% of sales in 1997. Selling,
general and administrative expenses included increased costs resulting from the
acquisition of Croda Coatings in 1998 offset by lower employee benefit costs and
lower accruals for environmental cleanup.

Selling, general and administrative expenses in 1998 included charges for
environmental and legal claims. For a discussion on pending environmental and
legal claims, refer to Note Seventeen: "Contingencies and Commitments." Given
recorded reserves, the Company does not expect these matters to have a material
effect on the Company's present and future financial position or its results of
operations.

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. Ameron's waste accounted for less than one
percent of the total waste deposited at the site. In 1993, the State of
California was found to be 75% to 85% liable for the remediation costs of this
Superfund site. However, the State of California has appealed this finding.
Ameron maintains reserves that it believes to be adequate to cover expected
future costs associated with this matter.

OTHER INCOME

Other income included equity in earnings of affiliated companies (see Note Two:
"Other Income").  Equity in earnings of affiliated companies totaled $6.5
million in 1998, $2.5 million higher than the previous year. Tamco, 
Gifford-Hill-American, Inc., Ameron Saudi Arabia, Ltd., Bondstrand, Ltd. and 
Oasis-Ameron, Ltd. all reported earnings.

Other income also included royalties and fees from affiliated companies and
licensees, currency gains and losses, and other miscellaneous income. Royalty
and fee income decreased by $.8 million in 1998 compared to prior year due to
the worldwide slump in the coatings industry.  Foreign currency losses were
incurred by the Company's Colombian and Asian operations in 1998.

GAIN/(LOSS) ON SALE OF INVESTMENT AND OTHER ASSETS

In 1998, the Company sold its 50% ownership of Gifford-Hill-American, Inc. and
two idle concrete pipe manufacturing facilities. The gain on sale totaled $26.8
million. 

ASSET WRITE-DOWNS AND OTHER CHARGES

During the second half of fiscal 1998, the Company recorded pretax asset 
write-downs of $18.7 million and other charges of $3 million. The asset 
write-downs included the Company's investment in a concrete pipe venture in 
Saudi Arabia, certain idle concrete and steel pipe assets in the U.S. and two 
idle properties held by the Company in California and Hawaii. Other charges 
included the costs of consolidating certain facilities used by the Company's 
coatings business in the U.K. prior to the acquisition of Croda Coatings and 
severance costs associated with the elimination of approximately 200 positions 
in the U.S.

INTEREST

Interest expense totaled $15.6 million in 1998 compared to $12.4 million in
1997. The increase was the result of higher borrowing levels throughout 1998,
principally as a result of the Croda Coatings acquisition.

PROVISION FOR INCOME TAXES

The Company's effective tax rate decreased from 38% in 1997 to 35% in 1998. The
lower effective rate was attributable to higher earnings from foreign
subsidiaries where the income tax rates are lower than the domestic tax rates.
<PAGE>

NEW ACCOUNTING POLICIES

In 1998, the Company adopted Statement of Financial Accounting Standards No. 128
(SFAS 128), "Earnings per Share" which requires the Company to restate earnings
per share for all prior periods reported.  The adoption of SFAS 128 did not have
a material effect on the Company's financial position or results of operations.

In 1998, the Company adopted Statement of Financial Accounting Standards No. 130
(SFAS 130), "Reporting Comprehensive Income."  A statement of comprehensive
income is disclosed in this report.

In 1998, Statement of Financial Accounting Standards No. 131 (SFAS 131),
"Disclosures about Segments of an Enterprise and Related Information," was
issued.  The Company is required to adopt SFAS 131 during 1999.

In 1998, Statement of Financial Accounting Standards No. 132 (SFAS 132),
"Employers' Disclosures about Pension and Other Post-retirement Benefits," was
issued. The Company is required to adopt SFAS 132 during 1999.

SFAS 131 and SFAS 132 only require additional disclosure and have no effect on
the Company's financial position or results of operations.

In 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133), 
"Accounting for Derivative Instruments and Hedging Activities," was issued. 
The Company is required to adopt SFAS 133 for annual and interim periods 
ending after September 15, 1999. The Company is currently evaluating the 
impact of adopting SFAS 133 which is not expected to have a material effect 
on the Company's financial position or results of operations.

MARKET RISKS

The Company operates internationally, giving rise to exposure to market risks
from changes in foreign exchange rates. The Company also borrows floating-rate
debt and is subject to changes in interest rates. Derivative financial
instruments are used by the Company to reduce such risks. The magnitude and
volume of such transactions were not material for the periods presented. The
Company does not hold or issue financial or derivative financial instruments for
trading or speculative purposes. The Company provides credit to customers
consistent with normal industry practice. Ameron's businesses and customers are
subject to changes in competitive and economic conditions.

YEAR 2000

The Company's efforts to address Year 2000 (Y2K) issues began in 1997.  In
addressing the issues, the Company has employed a five-step process consisting
of 1) conducting a company-wide inventory, 2) assessing Y2K compliance, 3)
remediating non-compliant hardware and software, 4) testing remediated hardware 
and software and 5) certifying Y2K compliance.  Personnel from operations and 
from functional disciplines, as well as information technology professionals, 
are involved in the process. Outside consultants have also been retained to 
participate in the inventory and assessment process, provide support resources 
on a company-wide basis and minimize duplication of efforts.  Inventory and 
assessment activities are completed. The data are continuously updated as new 
information becomes available. Overall remediation efforts are estimated at 
approximately 85 percent complete.  Communication with customers and suppliers 
to determine the extent of their Y2K efforts is an integral part of the program.
Costs for Y2K efforts are not being accumulated separately. The costs are being 
expensed or capitalized as part of normal operations. Overall, the costs are not
expected to have a significant effect on the Company's financial position or 
results of operations.  The Company believes it will not have significant 
exposure to Y2K issues and that the risk to its operations and financial 
condition is not material.

RESULTS OF OPERATIONS: 1997 COMPARED WITH 1996

GENERAL

Earnings per share for the fiscal year ended November 30, 1997, were $4.73 on
sales of $533.5 million, compared to $3.87 per share on sales of $496.9 million
in 1996. Earnings per share in 1997 improved 22% over 1996. Return on average
stockholder's equity increased to 13% in 1997 from 11% in 1996.

The significant increase in earnings mainly reflected higher sales and earnings
from the Company's worldwide coatings business.

SALES

Sales increased by $36.6 million to $533.5 million in 1997, primarily due to an
increase in sales of the Coatings Group. Partially offsetting the coatings
increase were lower sales of construction products because of the continued
economic slowdown in Hawaii. Deliveries of fiberglass, concrete and steel pipe
were also down slightly in 1997 from 1996.
<PAGE>

Coatings Group sales improved to $190.7 million in 1997, versus $143.1 million
in 1996. Sales in domestic and European markets were up due principally to the
acquisition of the worldwide Devoe marine business from Imperial Chemical
Industries PLC (ICI) late in fiscal 1996. During the second quarter of 1997, 
the Company exchanged its product finishes business for a slightly larger 
maintenance coatings business of The Valspar Corporation.

Fiberglass-Composite Pipe Group sales decreased to $102.7 million in 1997 from
$104.1 million in 1996. The decrease was attributable to increased competition
and lower sales from European operations into the Middle East. Asian operations
posted slightly lower sales in 1997 versus 1996. Centron, acquired by the
Company in 1996, posted higher sales because of exports to worldwide oilfield
markets.

Concrete & Steel Pipe Group sales were $146.1 million in 1997, down slightly
from the $149.0 million posted in 1996. The decrease was due primarily to
weather-related and customer-requested delays that affected the timing of
deliveries. Total order backlog for this segment, at November 30, 1997, was
$71.5 million, compared to a backlog of $59.7 million  at the end of fiscal
1996.

Construction & Allied Products Group sales totaled $94.9 million in 1997, versus
$101.8 million in 1996. The Company's construction products business in Hawaii
reported substantially lower sales in 1997 compared to 1996. Construction
spending in 1997 for large public and private building projects continued to
decline in the Islands; spending for residential construction also declined. 
Sales for the Company's Pole Products Division improved slightly in 1997.

GROSS PROFIT

Gross profit in 1997 was $135.7 million or 25.4% of sales, compared to gross
profit of $129.3 million or 26.0% of sales in 1996. The increase in gross profit
dollars was attributed mainly to the higher sales of the Coatings Group and
improved productivity from the Fiberglass-Composite Pipe Group. The decline in
gross profit margin resulted from higher integration costs associated with the
Devoe acquisition and competitive pressures.

SELLING, GENERAL & ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses totaled $103.1 million in 1997 or
19.3% of sales, compared to $102.3 million or 20.6% of sales in 1996. The
percent of sales decrease was due partly to lower workers' compensation costs in
1997 and higher expenses related to the Centron acquisition and increased
provisions for doubtful accounts and pending claims in 1996.

OTHER INCOME

Other income included equity in earnings of affiliated companies (see Note Two:
"Other Income"). Equity in earnings of affiliated companies totaled $4.0 
million, an increase of $1.7 million from 1996. Tamco, Gifford-Hill-American, 
Inc., Bondstrand, Ltd. and Oasis-Ameron, Ltd. all reported improved earnings in 
1997.  Ameron Saudi Arabia, Ltd. reported its third consecutive year of losses.

Other income also included royalties and fees from affiliated companies and
licensees, currency gains and losses and other miscellaneous income. Royalty and
fee income rose $1.5 million in 1997 over 1996 due to new coatings licensing
agreements and improved results from fiberglass pipe and coatings licensees. 
Foreign currency losses of $.5 million were incurred by the Company's 
international operations in 1997.

ASSET WRITE-DOWN

During 1996, the Company wrote down the asset value of idle property held for 
sale to its estimated current market value.

INTEREST

Interest expense was $12.4 million in 1997, compared to $11.1 million in 1996.
The increase was the result of higher borrowing levels through-
out 1997.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

Any of the above statements 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.
Actual results could differ materially, and, as a result, the reader is
cautioned not to rely on these forward looking statements. The Company
disclaims, however, any intent or obligation to update these forward looking
statements.
<PAGE>

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                  Year ended November 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)                 1998          1997          1996
-----------------------------------------------------------------------------------------------
<S>                                                     <C>           <C>           <C>
Sales                                                   $ 552,146     $ 533,506     $ 496,940
Cost of sales                                            (412,934)     (397,823)     (367,677)
                                                        ---------------------------------------
Gross profit                                              139,212       135,683       129,263
Selling, general and administrative expenses             (109,345)     (103,075)     (102,320)
Other income                                               11,943        10,557         7,940
                                                        ---------------------------------------
Operating profit                                           41,810        43,165        34,883
Gain/(Loss) from sale of investment and other assets       26,853           (64)          576
Asset write-downs and other charges                       (21,669)           --        (1,000)
                                                        ---------------------------------------
Income before interest and income taxes                    46,994        43,101        34,459
Interest income                                               569           578           382
Interest expense                                          (15,646)      (12,433)      (11,134)
                                                        ---------------------------------------
Income before income taxes                                 31,917        31,246        23,707
Provision for income taxes                                (11,171)      (11,874)       (8,297)
                                                        ---------------------------------------
Net income                                              $  20,746     $  19,372     $  15,410
                                                        =======================================
Net income per share (Basic)                            $    5.17     $    4.84     $    3.89
                                                        =======================================
Net income per share (Diluted)                          $    5.08     $    4.73     $    3.87
                                                        =======================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                             As of November 30
(DOLLARS IN THOUSANDS)                                       1998         1997
--------------------------------------------------------------------------------
<S>                                                    <C>           <C>
ASSETS
  Current assets
     Cash and cash equivalents                          $  16,376     $  9,848
     Receivables, less allowance of $5,106 in
       1998 and $5,402 in 1997                            136,380      122,352
     Inventories                                          106,654       95,752
     Deferred income tax benefits                           7,726        9,083
     Prepaid expenses and other                             6,554        4,257
                                                        ------------------------
       Total current assets                               273,690      241,292

  Investments, advances and equity in undistributed
     earnings of affiliated companies                      22,182       33,777

  Property, plant and equipment
     Land                                                  37,361       34,911
     Buildings                                             70,736       49,792
     Machinery and equipment                              237,111      216,958
     Construction in progress                              13,546       12,255
                                                        ------------------------
       Total property, plant and equipment at cost        358,754      313,916
     Less accumulated depreciation                       (200,836)    (186,238)
                                                        ------------------------
       Total property, plant and equipment, net           157,918      127,678
  Long-term deferred income tax benefits                    8,763           --
  Intangible assets, net of accumulated amortization
     of $5,220 in 1998 and $4,149 in 1997                  18,101       11,282
  Other assets                                             19,565       19,196
                                                        ------------------------
     Total assets                                       $ 500,219     $433,225
                                                        ========================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>

<TABLE>
<CAPTION>
                                                            As of November 30
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)                1998         1997
--------------------------------------------------------------------------------
<S>                                                    <C>          <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities
     Short-term borrowings                              $  3,024     $    715
     Current portion of long-term debt                    12,681       17,654
     Trade payables                                       37,273       31,988
     Accrued liabilities                                  50,353       32,561
     Income taxes                                         23,499        4,347
                                                       -----------------------
       Total current liabilities                         126,830       87,265

  Deferred income taxes                                       --        2,907
  Long-term debt, less current portion                   165,308      140,917
  Other long-term liabilities                             40,913       49,154
                                                       -----------------------
     Total liabilities                                   333,051      280,243

  Stockholders' equity
     Common stock, par value $2.50 a share,
       authorized 12,000,000 shares,
       outstanding 4,030,112 shares in 1998 and
       4,005,487 shares in 1997, net of
       treasury shares                                   13,007        12,946
     Additional paid-in capital                          17,828        16,969
     Retained earnings                                  187,174       171,569
     Accumulated comprehensive income                    (8,062)       (5,723)
     Less treasury stock (1,172,900 shares
       in 1998 and 1997), at cost                       (42,779)      (42,779)
                                                       -----------------------
       Total stockholders' equity                       167,168       152,982
                                                       -----------------------
     Total liabilities and stockholders' equity        $500,219      $433,225
                                                       =======================
</TABLE>
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                   Year ended November 30
(DOLLARS IN THOUSANDS)                                        1998          1997          1996
------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>           <C>
OPERATING ACTIVITIES
  Net income                                              $ 20,746      $ 19,372      $ 15,410
  Adjustments to reconcile net income to net cash
     provided by (used in) operating activities:
       Depreciation                                         17,671        15,729        16,078
       Amortization                                          1,028           947           367
       Provision (benefit) for deferred income taxes            --           809        (4,414)
       Equity in earnings of affiliated companies           (6,513)       (3,990)       (2,298)
       Dividends from affiliated companies                   6,599         5,056         4,152
       (Gain) loss from sale of assets                     (26,853)           64          (576)
       Non-cash asset write-downs and other charges         21,669            --            --
       Other, net                                             (962)        1,789           884
  Other changes in operating assets and liabilities,
     net of business acquisitions:
       (Increase) decrease in receivables                  (11,681)      (22,801)        2,405
       (Increase) decrease in inventories                    3,986       (13,825)         (667)
       (Increase) decrease in other current assets            (922)        1,151        (2,211)
       Increase in long-term assets                         (8,012)         (191)         (536)
       Increase (decrease) in trade payables,
         accrued liabilities and income taxes               39,301       (11,264)       10,415
       Increase (decrease) in long-term liabilities        (17,999)         (965)        5,570
                                                          --------------------------------------
     Net cash provided by (used in) operating activities    38,058        (8,119)       44,579
                                                          --------------------------------------
INVESTING ACTIVITIES
  Proceeds from sale of investment                          25,000            --            --
  Proceeds from sale of assets                               6,395         2,287         1,371
  Additions to property, plant and equipment               (32,744)      (24,860)      (25,227)
  Business acquisitions                                    (46,419)           --       (29,032)
  Other                                                        584        (2,645)       (2,995)
                                                          --------------------------------------
     Net cash used in investing activities                 (47,184)      (25,218)      (55,883)
                                                          --------------------------------------
FINANCING ACTIVITIES
  Net change in debt with maturities of
     three months or less                                    2,322          (525)         (471)
  Issuance of debt                                          37,200        47,201        65,022
  Repayment of debt                                        (19,700)      (17,000)      (43,277)
  Dividends on common stock                                 (5,141)       (5,124)       (5,076)
  Issuance of common stock                                     920           808           776
                                                          --------------------------------------
     Net cash provided by financing activities              15,601        25,360        16,974
                                                          --------------------------------------
  Effect of exchange rate changes on cash
     and cash equivalents                                       53          (556)         (212)
                                                          --------------------------------------
     Net change in cash and cash equivalents                 6,528        (8,533)        5,458
  Cash and cash equivalents at beginning of year             9,848        18,381        12,923
                                                          --------------------------------------
  Cash and cash equivalents at end of year                $ 16,376      $  9,848      $ 18,381
                                                          ======================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                    Common Stock
                                                ----------------------
                                                     Shares                   Additional    Retained
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)    Outstanding     Amount   Paid-in Capital    Earnings       Other
-----------------------------------------------------------------------------------------------------------------
<S>                                             <C>            <C>       <C>                <C>           <C>
Balance, November 30, 1995                        3,956,497    $12,823           $15,322    $146,987      $2,219

  Net income -- 1996                                                                          15,410
  Exercise of stock options and issuance of
     stock to employee savings plan                  28,615         72               890
  Dividends on common stock of $1.28 a share                                                  (5,076)
  Foreign currency translation adjustments                                                                (1,070)
                                                -----------------------------------------------------------------
Balance, November 30, 1996                        3,985,112     12,895            16,212     157,321       1,149

  Net income -- 1997                                                                          19,372
  Exercise of stock options                          20,375         51               757
  Dividends on common stock of $1.28 a share                                                  (5,124)
  Foreign currency translation adjustments                                                                (6,872)
                                                -----------------------------------------------------------------
Balance, November 30, 1997                        4,005,487     12,946            16,969     171,569      (5,723)

  Net income -- 1998                                                                          20,746
  Exercise of stock options                          24,625         61               859
  Dividends on common stock of $1.28 a share                                                  (5,141)
  Minimum pension liability adjustment                                                                      (502)
  Foreign currency translation adjustments                                                                (1,837)
                                                -----------------------------------------------------------------
BALANCE,  NOVEMBER 30, 1998                       4,030,112    $13,007           $17,828    $187,174     $(8,062)
                                                =================================================================
</TABLE>

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                                 Year ended November 30
(DOLLARS IN THOUSANDS)                                      1998           1997           1996
------------------------------------------------------------------------------------------------
<S>                                                      <C>           <C>            <C>
Net Income                                               $20,746        $19,372        $15,410
  Other comprehensive losses:
     Foreign currency translation adjustments             (1,837)        (6,872)        (1,070)
     Minimum pension liability adjustments                  (502)            --             --
                                                         ---------------------------------------
     Other comprehensive losses, net of tax               (2,339)        (6,872)        (1,070)
                                                         ---------------------------------------
  Comprehensive income                                   $18,407        $12,500        $14,340
                                                         =======================================
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE ONE: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Ameron 
International Corporation and all wholly-owned subsidiaries (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 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 
reported amounts of revenues and expenses during the reporting period. 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 or when title passes. Revenue from sales of concrete and steel pipe 
is recorded at shipment or at the time the pipe is inspected and accepted by 
the customer.

RESEARCH & DEVELOPMENT COSTS
Research and development costs are expensed as incurred. Such costs were 
approximately $5,155,000 in 1998, $5,534,000 in 1997 and $4,400,000 in 1996.

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 discernible. Expenditures that extend the life 
of the related property or mitigate or prevent future environmental 
contamination are capitalized. 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
The Company follows Statement of Financial Accounting Standards No. 109 (SFAS 
109), "Accounting for Income Taxes." Under the asset and liability method of 
SFAS 109, deferred tax assets and liabilities are recognized for the future 
tax consequences attributable to differences between the financial statement 
carrying amounts of existing assets and liabilities and their respective tax 
bases.

NET INCOME PER SHARE
In 1998, the Company adopted Statement of Financial Accounting Standards No. 
128 (SFAS 128), "Earnings Per Share," which requires the Company to disclose 
both basic and diluted earnings per share. The basic earnings per share is 
computed on the basis of the weighted average number of common shares 
outstanding. The diluted earnings per share is computed on the basis of the 
weighted average number of common shares outstanding each year, plus common 
stock equivalents related to diluted stock options. The number of shares used 
in the computation of basic per share data was 4,016,852 in 1998, 4,003,452 
in 1997, and 3,966,490 in 1996. The number of shares used in the computation 
of diluted per share data was 4,084,377 in 1998, 4,094,885 in 1997 and 
3,982,006 in 1996.

COMPREHENSIVE INCOME
Components of comprehensive income, as detailed on the Consolidated 
Statements of Comprehensive Income, are net of tax. The related tax effect of 
foreign currency translation adjustments was $989,000, $4,212,000, and 
$576,000 in 1998, 1997 and 1996, respectively. The related tax effect of 
minimum pension liability adjustment was $270,000 in 1998.

CASH & CASH EQUIVALENTS
Cash equivalents include time deposits 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 by either the first-in, first-out or average cost methods. Such 
cost includes raw materials, direct labor and manufacturing overhead. Certain 
steel inventories are valued using the last-in, first-out cost method.

EQUITY METHOD OF ACCOUNTING
Investments in significant 30-  to 50-percent-owned affiliates are accounted 
for by the equity method of accounting, whereby the investment is carried at 
cost of acquisition, plus the Company's equity in undistributed earnings or 
losses since acquisition.  Reserves are provided where management determines 
that the investment or equity in earnings is not realizable.

PROPERTY, PLANT & EQUIPMENT
Items capitalized as property, plant and equipment, including improvements to 
existing facilities, are recorded at cost.  The book value of obsolete assets 
is charged to depreciation expense when they are scrapped. Upon sale or 
retirement, the cost and related accumulated depreciation are removed from 
the respective accounts, and any gain or loss is included in income. 
Maintenance and repair costs are expensed as incurred. Interest costs 
applicable to the construction of major plant and expansion projects were 
immaterial for the periods presented.

DEPRECIATION METHOD
Depreciation is computed principally using the straight-line method based on 
estimated useful lives of the assets. Annual rates of depreciation are as 
follows:

<TABLE>
<CAPTION>

                                             Percentage of Cost
-----------------------------------------------------------------
<S>                                          <C>
Buildings                                         2.50 - 10.00
Machinery and equipment
  Autos, trucks and trailers                      6.67 - 50.00
  Cranes and tractors                            10.00 - 15.00
  Manufacturing equipment                         6.67 - 33.33
  Other                                           5.00 - 66.67

</TABLE>

Depreciation expense was $17,671,000 in 1998, $15,729,000 in 1997 and 
$16,078,000 in 1996.

AMORTIZATION OF INTANGIBLES
Goodwill and other intangible assets are amortized on a straight-line basis 
over periods ranging up to 40 years.

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 
Company experience.

FOREIGN CURRENCY TRANSLATION
The functional currency for the majority of the Company's foreign operations 
is the applicable local currency. 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 as a component of 
shareholders' equity. 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 are 
used by the Company to reduce those risks. The magnitude and volume of such 
transactions were not material for the periods presented. The Company does 
not hold or issue financial or derivative financial instruments for trading 
or speculative purposes. 

STOCK OPTIONS
In 1997, the Company adopted Statement of Financial Accounting Standards No. 
123 (SFAS 123), "Accounting for Stock-Based Compensation." As permitted under 
this standard, the Company has elected to follow Accounting Principles Board 
Opinion No. 25, "Accounting For Stock Issued to Employees" in accounting for 
its stock options and other stock-based employee awards. Pro forma 
information regarding net income and earnings per share, as calculated under 
the provisions of SFAS 123, are disclosed in Note Sixteen.

<PAGE>

LONG-LIVED ASSETS
In 1997, the Company adopted Statement of Financial Accounting Standards No. 
121 (SFAS 121), "Accounting for the Impairment of Long-Lived Assets and 
Long-Lived Assets to be Disposed of," which requires impairment losses to be 
recorded on long-lived assets used in operations when indications of 
impairment are present and the undiscounted cash flows estimated to be 
generated by those assets are less than the assets' carrying amount. As of 
November 30, 1998, the carrying value of the Company's assets held for sale, 
in aggregate ,was $2,143,000. The fair market value of these assets total 
$2,975,000. The adoption of SFAS 121 did not have a material effect on the 
Company's financial position or results of operations.

PENDING ACCOUNTING CHANGES
In 1998, Statement of Financial Accounting Standards No. 131 (SFAS 131), 
"Disclosures about Segments of an Enterprise and Related Information," was 
issued. The Company is required to adopt SFAS 131 during 1999.

In 1998, Statement of Financial Accounting Standards No. 132 (SFAS 132), 
"Employers' Disclosures about Pension and Other Post-retirement Benefits," 
was issued. The Company is required to adopt SFAS 132 during 1999.

SFAS 131 and SFAS 132 only require additional disclosure and have no effect 
on the Company's financial position or results of operations.

In 1998, Statement of Financial Accounting Standards No. 133 (SFAS 133), 
"Accounting for Derivative Instruments and Hedging Activities," was issued. 
The Company is required to adopt SFAS 133 for annual and interim periods 
ending after September 15, 1999. The Company is currently evaluating the 
impact of adopting SFAS 133 which is not expected to have a material effect 
on the Company's financial position or results of operations.

SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997        1996
----------------------------------------------------------------------------------------
<S>                                               <C>           <C>         <C>
Interest paid                                          $15,085      $12,428     $ 9,545
Income taxes paid, net                                   4,536       16,919       9,010
Business acquisitions:
    Fair value of assets acquired                       55,466           --      29,245
    Less fair value of assumed liabilities               9,047           --         213
                                                       ---------------------------------
    Total business acquisitions                        $46,419           --     $29,032
                                                       ---------------------------------

</TABLE>

NOTE TWO: OTHER INCOME
Other income for the years ended November 30 included the following:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997        1996
----------------------------------------------------------------------------------------
<S>                                               <C>          <C>           <C>
Royalties and fees from affiliated 
    companies and licensees                           $  5,201      $ 6,051     $ 4,557
Equity in earnings of 
    affiliated companies                                 6,513        3,990       2,298
Foreign currency gain/(loss)                              (535)        (481)        558
Miscellaneous                                              764          997         527
                                                      ----------------------------------
                                                      $ 11,943      $10,557     $ 7,940
                                                      ==================================

</TABLE>

The Company provides technical services and receives fees, royalties and 
other income from several of its affiliates and licensees, which are included 
above.

NOTE THREE: CASH & CASH EQUIVALENTS
At November 30, 1998, the Company had approximately $350,000 invested in time 
deposits. The Company had $270,000 in cash equivalents at November 30, 1997. 
The carrying value of cash and cash equivalents approximates their fair value.


NOTE FOUR: RECEIVABLES
Receivables at November 30 were as follows:

<TABLE>
<CAPTION>

(In thousands)                                            1998         1997
-----------------------------------------------------------------------------
<S>                                                <C>          <C>
Trade                                                 $133,745     $115,740
Affiliated companies                                     2,435        2,574
Other                                                    5,306        9,440
Reserve                                                 (5,106)      (5,402)
                                                     ------------------------
                                                      $136,380     $122,352
                                                     ========================

</TABLE>

The Company's provision for bad debts was $2,169,000 in 1998, $1,798,000 in 
1997 and $2,583,000 in 1996.


NOTE FIVE: INVENTORIES
Inventories at November 30 were as follows:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
-----------------------------------------------------------------------------
<S>                                             <C>              <C>
Finished products                                     $ 62,888      $56,989
Products in process                                     20,988       18,791
Materials and supplies                                  22,778       19,972
                                                      -----------------------
                                                      $106,654      $95,752
                                                      =======================

</TABLE>

Certain steel inventories are valued using the last-in, first-out cost 
method. These items comprised 2.5% of consolidated inventories at November 
30, 1998 and 1997. If such inventories had been valued using the first-in, 
first-out cost method, total inventories would have increased by $1,472,000 
and $1,776,000 at November 30, 1998 and 1997, respectively.

NOTE SIX: AFFILIATED COMPANIES
During 1998 the Company had certain principal investments, which have been
accounted for by the equity method, as summarized below:

<TABLE>
<CAPTION>

                                                                  Ownership
Products                           Affiliate                       Interest
---------------------------------------------------------------------------
<S>                             <C>                                  <C>
Concrete pipe products             Gifford-Hill-American, Inc.          50%
                                   Ameron Saudi Arabia, Ltd.            30%
Steel products                     Tamco                                50%
Other                              Bondstrand, Ltd.                     40%
                                   Oasis-Ameron, Ltd.                   40%

</TABLE>

As discussed in Notes Seven and Nine, in the fourth quarter of 1998, the 
Company's investment in Gifford-Hill-American, Inc. was sold; and the 
Company's investment in Ameron Saudi Arabia Ltd. was written down to zero 
value.

Investments in affiliated companies and the amount of undistributed retained 
earnings included in the Company's consolidated retained earnings at November 
30 were as follows:

<TABLE>
<CAPTION>

                                          Concrete
                                              pipe       Steel
(IN THOUSANDS)                            products    products        Other       Total
---------------------------------------------------------------------------------------
<S>                                    <C>            <C>         <C>         <C>
Investment, November 30, 1998
  Cost                                    $  6,094    $  8,482     $  3,706    $ 18,282
  Accumulated equity in 
     undistributed earnings                  7,019      12,905        2,962      22,886
  Reserves                                 (13,113)     (4,612)      (1,261)    (18,986)
                                         ----------------------------------------------
                                          $     --    $ 16,775     $  5,407    $ 22,182
                                         ==============================================
Dividends Received in Fiscal 1998         $  2,250    $  3,025     $  1,324    $  6,599
                                         ==============================================
Investment, November 30, 1997
  Cost                                     $ 6,194    $  8,482     $  3,706    $ 18,382
  Accumulated equity in 
     undistributed earnings                 13,292      11,034        2,364      26,690
  Reserves                                  (7,981)     (2,741)        (573)    (11,295)
                                         ----------------------------------------------
                                           $11,505    $ 16,775     $  5,497    $ 33,777
                                         ----------------------------------------------
Dividends Received in Fiscal 1997          $ 1,062    $  3,025     $    969    $  5,056
                                         ==============================================

</TABLE>

The Company has provided for income taxes on the undistributed earnings of 
its affiliated companies.

The Company's investments in Ameron Saudi Arabia, Ltd., Bondstrand, Ltd. and 
Oasis-Ameron, Ltd. were recorded based on audited financial statements as of 
December 31, 1997, and unaudited financial statements as of September 30, 
1998. The investment in Tamco was based on audited financial statements as of 
November 30, 1998.

Summarized and combined financial information for affiliates in the concrete 
pipe products business follows:

<PAGE>

Financial Condition 

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
----------------------------------------------------------------------------
<S>                                                <C>        <C>
Current assets                                         $51,260     $ 70,719
Noncurrent assets                                       24,577       35,076
                                                       ---------------------
                                                       $75,837     $105,795
                                                       =====================

Current liabilities                                    $32,842     $ 36,088
Noncurrent liabilities                                   1,124       14,798
Stockholders' equity                                    41,871       54,909
                                                       ---------------------
                                                       $75,837     $105,795
                                                       =====================

</TABLE>


Results of Operations 

<TABLE>
<CAPTION>

(IN THOUSANDS)                                1998        1997         1996
----------------------------------------------------------------------------
<S>                                     <C>         <C>          <C>
Net sales                                  $69,041     $56,295      $38,753
                                           =================================
Gross profit                               $11,092     $12,151      $ 8,987
                                           =================================
Net income (loss)                          $3,864      $   207      $(2,397)
                                           =================================

</TABLE>

Summarized and combined financial information for Tamco, Bondstrand, Ltd. and 
Oasis-Ameron, Ltd. follows:

Financial Condition 

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                 <C>          <C>
Current assets                                         $61,442      $58,504
Noncurrent assets                                       33,281       30,538
                                                      ---------------------
                                                       $94,723      $89,042
                                                      =====================

Current liabilities                                    $29,337      $26,442
Noncurrent liabilities                                   5,829        5,024
Stockholders' equity                                    59,557       57,576
                                                      ---------------------
                                                       $94,723      $89,042
                                                      =====================

</TABLE>

Results of Operations

<TABLE>
<CAPTION>

(IN THOUSANDS)                                1998        1997         1996
----------------------------------------------------------------------------
<S>                                     <C>         <C>          <C>
Net sales                                 $168,393    $173,041     $150,116
                                          ==================================
Gross profit                              $ 41,186    $ 29,949     $ 26,711
                                          ==================================
Net income                                $ 15,414    $ 10,017     $  8,432
                                          ==================================

</TABLE>

The amount of investments and accumulated equity in the undistributed 
earnings in the Middle Eastern affiliates was approximately $5,500,000 and 
$16,000,000 at November 30, 1998 and 1997.

Sales and technical services provided by the Company to affiliates in the 
Middle East totaled approximately $2,100,000 in 1998, $2,300,000 in 1997 and 
$1,200,000 in 1996, and related receivables aggregated approximately 
$2,200,000 at November 30, 1998, and $2,300,000 at November 30, 1997.


NOTE SEVEN: SALE OF ASSETS
During the fourth quarter of 1998, the Company sold its 50% ownership of 
Gifford-Hill-American, Inc. This sale resulted in an after-tax gain of $15.6 
million or $3.82 per share, for the year. The Company also sold two idle 
facilities for an after-tax gain of $1.8 million or $.45 per share.


NOTE EIGHT: BUSINESS ACQUISITIONS
In the first quarter of fiscal 1996, the Company acquired for cash 
substantially all the assets of Centron Corporation (Centron). Centron, 
located in Mineral Wells, Texas is a manufacturer of fiberglass pipe for the 
worldwide oilfield market. The acquisition was accounted for as a purchase 
and Centron's results of operations have been included in the Company's 
consolidated financial statements since January 1996.

During the fourth quarter of fiscal 1996, the Company acquired for cash the 
worldwide Devoe marine coatings business of Imperial Chemical Industries PLC, 
(ICI). The acquisition was accounted for as a purchase and its results of 
operations were included in the Company's consolidated financial statements 
beginning in the fourth quarter of fiscal 1996.

During the first quarter of fiscal 1997, the Company acquired the maintenance 
coatings business of The Valspar Corporation for cash and the assets of the 
Company's product finishes business. The transaction was accounted for as a 
purchase, and its results of operations were included in the Company's 
consolidated financial statements beginning in the second quarter of fiscal 
1997.

During the second quarter of fiscal 1998, the Company acquired for cash the 
worldwide Croda Coatings business of Croda International Plc (Croda).This 
acquisition was accounted for as a purchase, and the results of operations 
were included in the Company's consolidated financial statements beginning in 
the second quarter of fiscal 1998.

During the second quarter of fiscal 1998, the Company acquired for cash Hope 
Composites 2000, Inc., a privately-owned manufacturer of fiberglass pipe and 
fittings in Georgia. This acquisition was accounted for as a purchase, and 
the results of operations were included in the Company's consolidated 
financial statements beginning in the second quarter of fiscal 1998.

The above acquisitions totaled $81,523,000. The excess of the purchase price 
over the fair value of the assets acquired was $19,289,000. The Company 
recorded $15,217,000 as goodwill and $4,072,000 as other intangibles, 
consisting primarily of trademarks and know-how. Goodwill is being amortized 
on a straight-line basis over a period not to exceed 40 years. Other 
intangible assets are being amortized on a straight-line basis over periods 
ranging from 3 to 10 years.


NOTE NINE: ASSET WRITE-DOWNS AND OTHER CHARGES

In the second half of fiscal 1998, the Company recorded pretax asset 
write-downs of $18.7 million and other charges of $3 million. These charges 
included revaluation of under performing assets to their estimated realizable 
values, facility consolidations and related severance costs for approximately 
200 positions.

Asset write-downs and other charges incurred by 
the Company were as follows:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                                         1998
----------------------------------------------------------------------------
<S>                                                              <C>
Investment write-down                                               $10,505
Property and equipment write-downs                                    8,195
Employee severance costs                                              2,500
Facility consolidations                                                 469
                                                                    --------
Total                                                               $21,669
                                                                    ========

</TABLE>

Management periodically evaluates the recoverability of its long-lived assets 
on the basis of SFAS 121 whenever events or circumstances indicate the asset 
may be impaired. As a result of such a review during the fourth quarter of 
1998, the Company determined certain investment and asset write-downs were 
required.

Management reviewed the recoverability of the Company's investment in Ameron 
Saudi Arabia Ltd. (ASAL), given the significant decline in oil prices that 
occurred in 1998 and related anticipated reduction in infrastructure spending 
in Saudi Arabia. ASAL recorded losses for the past few years and a small 
profit in the current year. As a result of the economic events earlier in the 
year, management determined that its investment in ASAL was impaired. The 
charge of $10.5 million represents a write-off of the Company's net 
investment in ASAL.

The property and equipment write-downs related to real property held for sale 
in California and Hawaii, as well as the write-down of manufacturing 
equipment associated with a discontinued product line. The California 
property was originally purchased in 1990 as a manufacturing site and is 
currently held for sale. The write-down to estimated net realizable value was 
based upon recent independent third-party offers to purchase the property. 
The portion of the total charge attributable to the California property was 
$1 million.

Land was purchased in 1991 for the development of a quarry in Hawaii. The 
overall market failed to expand in Hawaii because of the economic downturn in 
the Pacific Rim during 1998. As a result, management determined that an 
adjustment of $3.8 million was required to record the land at estimated 
current market value. 

During the fourth quarter, the Company discontinued certain pre-stressed 
concrete pipe and thick-walled reinforced concrete pipe product lines. The 
portion of the charge associated with the write-down of equipment used 
exclusively to manufacture these products was $3.4 million.

The severance cost of $2.5 million related to the elimination of 
approximately 200 positions throughout the Company's domestic operations. 
Initial severance and benefit payments totaled approximately $1.2 million in 
1998. Remaining payments of approximately $1.3 million are anticipated to be 
paid in 1999.

The facility consolidations included the shutdown of the Portland, Oregon 
concrete pipe plant and the closure of warehouses in the United Kingdom, 
which were operated by a subsidiary of the Company prior to the Croda 
Coatings acquisition. The costs associated with the closures totaled $469,000.


<PAGE>

Asset write-downs and other charges by business 
segment were as follows:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                                         1998
---------------------------------------------------------------------------
<S>                                                              <C>
Coatings                                                            $   905
Fiberglass-Composite Pipe                                               248
Concrete & Steel Pipe                                                 4,235
Construction & Allied Products                                        4,065
Investment                                                           10,505
Corporate                                                             1,711
                                                                    -------
                                                                    $21,669
                                                                    =======

</TABLE>

NOTE TEN: ACCRUED LIABILITIES
Accrued liabilities at November 30 were as follows:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                 <C>          <C>
Compensation and benefits                              $14,603      $12,879
Advances from customers                                  9,156          816
Interest                                                 6,615        4,330
Reserves for pending claims and litigation               4,413        3,342
Self-insurance reserves                                  4,271        2,053
Taxes (other than income taxes)                          3,652        3,181
Commissions and royalties                                1,353        1,314
Other                                                    6,290        4,646
                                                       --------------------
                                                       $50,353      $32,561
                                                       ====================

</TABLE>

NOTE ELEVEN: OTHER LONG-TERM LIABILITIES
Other long-term liabilities at November 30 were as follows:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                 <C>          <C>
Reserves for pending claims and litigation             $11,724      $15,887
Compensation and benefits                                8,942       13,955
Interest and self-insurance reserves                     8,421       11,114
Other                                                   11,826        8,198
                                                       --------------------
                                                       $40,913      $49,154
                                                       ====================

</TABLE>

NOTE TWELVE: EMPLOYEE BENEFIT PLANS
The Company has a qualified, defined benefit, noncontributory pension plan 
for employees not covered by union pension plans, which is accounted for in 
accordance with SFAS No. 87. 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 deems 
appropriate based on actuarial consultants' recommendations.

Assets of the defined benefit plan are invested in a directed trust. Assets 
in the trust are invested in equity securities of corporations (including 
$6,508,000 of the Company's common stock at November 30, 1998), 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. The amount of the coverage is designed to provide sufficient 
revenues to cover all costs of the plan if assumptions made as to mortality 
experience, policy earnings and other factors are realized. As of November 
30, 1998 and 1997, the cash surrender value of these policies was $6,800,000 
and $5,899,000, respectively.

Net periodic pension cost for the years ended November 30 consisted of
the following:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                1998        1997         1996
---------------------------------------------------------------------------
<S>                                     <C>        <C>          <C>
Service cost:
  Defined benefit plan                     $ 2,102    $  1,912     $  1,953
  Supplemental plan                            306         246          217
Interest cost:
  Defined benefit plan                       8,785       8,707        8,292
  Supplemental plan                            347         300          250
Return on plan assets                       (9,141)    (35,281)     (14,996)
Net deferral/(benefit):
  Defined benefit plan                      (7,608)     23,670        4,560
  Supplemental plan                            214         339          346
                                           --------------------------------
Net periodic pension (benefit)cost         $(4,995)   $   (107)    $    622
                                           ================================

</TABLE>

The following table sets forth the funding status of the qualified, defined 
benefit plan and the amount recognized in the Company's balance sheet at 
November 30:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                <C>         <C>
Actuarial present value of:
  Vested benefit obligation                           $131,867     $112,632
  Non-vested benefits                                      929          452
                                                      ---------------------
Accumulated benefit obligation                         132,796      113,084
Effect of salary increases                               7,432        8,121
                                                      ---------------------
Actuarial present value of 
  projected benefit obligation                         140,228      121,205
Less plan assets at market value                       151,755      150,454
                                                      ---------------------
Plan assets in excess of projected
  benefit obligation                                   (11,527)     (29,249)
Unrecognized asset                                       9,546       33,130
                                                      ---------------------
Accrued pension cost in 
  consolidated balance sheets                         $ (1,981)    $  3,881
                                                      =====================
</TABLE>

The following table sets forth the status of the supplemental plan as of 
November 30:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                  <C>          <C>
Actuarial present value of:
  Vested benefit obligation                            $ 4,780       $3,581
  Non-vested benefits                                       --            7
                                                       --------------------
Accumulated benefit obligation                           4,780        3,588
Effect of salary increases                                 966          751
                                                       --------------------
Actuarial present value of projected 
  benefit obligation                                     5,746        4,339
Unrecognized obligation                                   (371)        (503)
Unrecognized net loss                                   (1,468)        (552)
Amount reflected as additional minimum
  pension liability                                        873          304
                                                       --------------------
Accrued pension cost in consolidated
  balance sheets                                       $ 4,780       $3,588
                                                       ====================

</TABLE>

The 1998 actuarial computations for both the qualified, defined benefit plan 
and the supplemental plan assumed a discount rate of 6.25% and annual salary 
increases of 3.75%. The qualified, defined benefit plan assumed an expected 
long-term rate of return of 9.75%.

Approximately 18% of the Company's employees are covered by union-sponsored, 
collectively bargained, multi-employer pension plans. The Company contributed 
and charged to expense $2,900,000, $2,700,000 and $2,600,000 in 1998, 1997 
and 1996, respectively. These contributions are determined in accordance with 
the provisions of negotiated labor contracts and generally are based on the 
number of hours worked. Information from the plans' administrators is not 
available to permit the Company to determine its share of unfunded vested 
benefits, if any. The Company has no intention of withdrawing from any of 
these plans, nor is there any intention to terminate such plans.

The Company has a deferred compensation plan providing key 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, 
which is reflected in long-term liabilities, was $6,865,000 at November 30, 
1998, and $6,297,000 at November 30, 1997. The participant deferrals earn 
interest at a rate based on U.S. Government Treasury rates. The interest 
expense related to this plan was $610,000 in 1998, $550,000 in 1997 and 
$392,000 in 1996.

The Company has a life insurance plan wherein eligible executives are 
provided 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 $394,000 in 1998, $361,000 in 1997 and, $350,000 in 1996.

In connection with the above two plans, whole life insurance contracts were 
purchased on the related participants. At November 30, 1998 and 1997, the 
cash surrender value of these policies was $10,731,000 and $9,197,000, 
respectively, net of loans of $2,043,000.

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 1996, 

<PAGE>

contributions were in the form of the Company's common stock and 
cash. In 1998, 1997 and 1996, the Company recorded expenses for matching 
contributions of $482,000, $286,000 and $433,000, respectively, while 4,840 
shares of common stock were issued by the Company to the savings plan in 1996.


NOTE THIRTEEN: INCOME TAXES
The provision for income taxes for the years ended November 30 included 
the following:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                1998        1997         1996
---------------------------------------------------------------------------
<S>                                    <C>         <C>           <C>
Current
  Federal                                 $ 14,993     $ 9,875      $ 9,320
  Foreign                                    3,110         (82)       1,730
  State                                      3,381       1,272        1,661
                                          ---------------------------------
                                          $ 21,484     $11,065      $12,711
Deferred
  Federal                                 $ (8,352)    $   676      $(3,755)
  Foreign                                     (397)        (63)         (46)
  State                                     (1,564)        196         (613)
                                          ---------------------------------
                                          $(10,313)    $   809      $(4,414)
                                          ---------------------------------
                                          $ 11,171     $11,874      $ 8,297
                                          =================================

</TABLE>

The principal types of temporary differences and the tax effect of each, 
which give rise to the deferred tax provision (benefit), for the years ended 
November 30 follow:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                1998        1997         1996
----------------------------------------------------------------------------
<S>                                    <C>           <C>         <C>
Accelerated depreciation                  $ (1,304)     $ (306)     $    (6)
Change in nondeductible reserves            (4,364)      1,601       (3,801)
Equity in earnings of 
  affiliated companies                      (3,425)       (482)        (343)
Capital loss carryforwards                   2,347          --           --
Write down of fixed assets                  (3,198)         --         (410)
Federal alternative minimum tax
  and State loss carryforwards                  --          --           32
Other, net                                    (369)         (4)         114
                                          ---------------------------------
                                          $(10,313)     $  809      $(4,414)
                                          =================================

</TABLE>

Deferred tax assets (liabilities) were comprised of the following as of 
November 30:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                <C>          <C>
Non-current deferred taxes
  Employee benefits                                   $  7,059     $  9,394
  Self insurance/claims reserves                        15,071        7,979
  Other reserves                                         1,158           --
  Investments                                               --       (2,696)
  Fixed assets                                         (15,069)     (19,571)
  Federal and State tax credit and 
     loss carry forwards                                    --        2,347
  Other                                                    544         (360)
                                                      ---------------------
Net non-current deferred tax assets/(liabilities)     $  8,763     $ (2,907)
Current deferred taxes
  Employee benefits                                   $  2,252     $  2,732
  Self-insurance/claims reserves                         1,353        1,435
  Accounts receivable                                    1,435        1,401
  Inventory                                              2,910        3,273
  Other reserves                                             9           --
  Other                                                   (233)         242
                                                      ---------------------
Net current deferred tax assets                       $  7,726     $  9,083
                                                      ---------------------
Net deferred tax assets                               $ 16,489     $  6,176
                                                      =====================

</TABLE>

The tax provision represents effective tax rates of 35%, 38% and 35% of 
pretax income for the years ended November 30, 1998, 1997 and 1996, 
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% for the years ended November 30, 1998, 1997 and 1996 follows:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                1998        1997         1996
---------------------------------------------------------------------------
<S>                                     <C>         <C>          <C>
Domestic pretax income                     $21,497     $24,746      $17,534
Foreign pretax income                       10,420       6,500        6,173
                                           --------------------------------
                                           $31,917     $31,246      $23,707
                                           ================================

Taxes at federal statutory rate            $11,171     $10,936      $ 8,297
State taxes (net of federal tax benefit)     1,181         954          681
Foreign losses with no federal benefit         460          87           11
Percentage depletion                          (350)       (379)        (484)
Foreign branch withholding taxes               420         571          (20)
Equity in earnings of 
  affiliated companies                      (1,910)     (1,484)        (948)
Other, net                                     199       1,189          760
                                           --------------------------------
                                           $11,171     $11,874      $ 8,297
                                           ================================

</TABLE>

In 1998, the Company settled items disputed with the Internal Revenue Service 
relating to the audit of fiscal years 1987 through 1989. The related refund 
received was not material to the Company's financial statements.

In 1996, the Internal Revenue Service 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 is in 
dispute. The Internal Revenue Service is in the process of reviewing this 
appeal. The resolution of these matters is not expected to have a material 
effect on the Company's financial position or its results of operations.

NOTE FOURTEEN: DEBT
Short-term borrowings consisted of loans payable to banks by foreign 
subsidiaries totaling $3,024,000 and $715,000 as of November 30, 1998, and 
1997, respectively. The average interest rate on these loans was 
approximately 7.25% in 1998 and 9.51% in 1997.

Domestically, the Company has uncommitted, short-term bank credit lines 
totaling $19,400,000 with interest at various money market rates. 

Long-term debt as of November 30 consisted of the following:

<TABLE>
<CAPTION>

(IN THOUSANDS)                                            1998         1997
---------------------------------------------------------------------------
<S>                                                 <C>          <C>
Fixed-rate unsecured notes payable:
  8.63%, payable in annual principal 
     installments of $5,000                            $    --      $ 5,000
  9.79%, payable in annual principal 
     installments of $12,000                            24,000       36,000
  7.92%, payable in annual principal 
     installments of $8,333, 
     commencing in 2001                                 50,000       50,000
Variable-rate industrial development bonds, 
  payable in 2016 (3.20% at November 30, 1998)           7,200        7,200
Variable-rate unsecured bank 
  revolving  credit facilities 
  (approximately 5.90% at November 30, 1998)            94,406       57,429
Variable-rate unsecured bank loan, 
  payable by a consolidated subsidiary in
  Dutch guilders, with annual principal 
  installments of approximately $681 
  (4.17% at November 30, 1998)                           2,383        2,942
                                                      ---------------------
                                                       177,989      158,571
Less current portion                                    12,681       17,654
                                                      ---------------------
                                                      $165,308     $140,917
                                                      =====================

</TABLE>

The Company maintains a $150,000,000 revolving credit facility with five 
banks. 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 facility must be repaid. At November 30, 1998, 
$85,000,000 was borrowed under this facility.

Additionally, two consolidated subsidiaries maintain revolving credit 
facilities with four banks. The subsidiaries may borrow in various 
currencies, at interest rates based on specified margins over money market 
rates. One subsidiary is able to borrow up to the equivalent of $7,000,000 at 
any time through October 2001 

<PAGE>

under one facility, and $3,000,000 through September 1999 under a second 
facility. A third arrangement permits borrowings up to $6,000,000; this 
availability declines by $600,000 semi-annually. The other subsidiary is able 
to borrow up to the equivalent of $3,000,000 at any time under one facility. 
At November 30, 1998, $8,461,000 was available under these arrangements. At 
November 30, 1998, $9,406,000 was borrowed under these bank facilities.

Future payments due on long-term debt total $12,681,000 in 1999, $12,681,000 
in 2000, $12,680,000 in 2001, $8,673,000 in 2002, and $9,046,000 in 2003.

The lending agreements contain various restrictive covenants, including the 
requirement to maintain specified amounts of working capital and net worth 
and restrictions on cash dividends, borrowings, liens, investments and 
guarantees. Under the most restrictive provisions of the Company's lending 
agreements, approximately $10,695,000 of retained earnings was not restricted 
at November 30, 1998, as to the declaration of cash dividends and/or the 
repurchase of Company stock. At November 30, 1998, the Company was in 
compliance with all financial 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.

The following disclosure of the estimated fair value of the Company's debt is 
made in accordance with the requirements of Statement of Financial Accounting 
Standards No. 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.

<TABLE>
<CAPTION>

                                                        November 30, 1998
                                                      ---------------------
                                                      Carrying         Fair
(IN THOUSANDS)                                          Amount        Value
---------------------------------------------------------------------------
<S>                                                <C>         <C>
Short-term borrowings                                 $  3,024     $  3,024
Fixed-rate, long-term debt                              74,000       80,009
Variable-rate, long-term debt                          103,989      103,989

</TABLE>

The carrying values of short-term and variable-rate, long-term debt are a 
reasonable estimate of their fair value. The estimated fair value of the 
Company's fixed-rate long-term debt is based on U.S. government notes plus an 
estimated spread at November 30, 1998, for similar securities with similar 
remaining maturities.

NOTE FIFTEEN: LEASE COMMITMENTS
Rental expense under long-term operating leases of property, vehicles and 
other equipment was $6,216,000 in 1998, $6,170,000 in 1997 and $7,201,000 in 
1996. At November 30, 1998, future rental commitments under these leases 
totaled $49,003,000. Future rental commitments are payable as follows:

<TABLE>
<CAPTION>

                                  Year ending
(IN THOUSANDS)                    November 30                            Amount
-------------------------------------------------------------------------------
<S>                                   <C>                            <C>
                                         1999                           $ 5,319
                                         2000                             4,768
                                         2001                             3,898
                                         2002                             2,925
                                         2003                             2,015
                                2004 - Beyond                            30,078
                                                                        -------
                                                                        $49,003
                                                                        =======

</TABLE>

Minimum payments for leases have not been reduced by minimum noncancelable 
sublease rentals aggregating $3,950,000 for operating leases.

NOTE SIXTEEN: INCENTIVE STOCK COMPENSATION PLANS
At November 30, 1998, the Company had various stock option plans, which are 
described below. The Company applies Accounting Principles Board Opinion No. 
25 (APB 25), "Accounting for Stock Issued to Employees," and related 
interpretations in accounting for its various stock option plans. In 1997, 
the Company adopted Statement of Financial Accounting Standards No. 123 (SFAS 
123), "Accounting for Stock-Based Compensation."

On January 27, 1992, the Board of Directors of the Company adopted the 
Incentive Stock Compensation Plan ("1992 Incentive Plan"). Under the terms of 
the 1992 Incentive Plan, 1.5% of the total number of shares of common stock 
outstanding on the preceding December 31 are available for grant of awards in 
the following calendar year to key employees.

The Company has reserved 341,484 shares of common stock for sale to employees 
under the 1992 Incentive Plan at November 30, 1998. The plan provides for the 
issuance of additional options to purchase not more than 250,000 shares of 
common stock in the form of incentive options under the provisions of Section 
422 of the Internal Revenue Code. Options can be incentive options or 
non-qualified options and may be granted for up to 10 years. Awards under the 
1992 Incentive Plan may include but are not limited to stock bonuses, stock 
options, convertible securities and restricted stock grants. Restrictions may 
limit the sale, transfer, voting rights and dividends on these shares. At 
November 30, 1998, 16,525 were available for future grants.

On June 27, 1994, the Board of Directors of the Company adopted the 1994 
Nonemployee Director Stock Option Plan (Nonemployee Director Plan). On March 
27, 1995, the Nonemployee Director Plan was approved by the stockholders at 
the Annual Stockholder's Meeting. Under the terms of the Nonemployee Director 
Plan, each Nonemployee Director shall automatically be granted 1,000 options 
on the first business day following the date of the annual meeting of the 
stockholders of the Company at which the directors of the Company are 
elected. The aggregate number of shares issued and issuable shall not exceed 
120,000. As of November 30, 1998, the Company had reserved 27,000 shares of 
common stock for sale under the Nonemployee Director Plan.

For both the 1992 Incentive Plan and the Nonemployee Director Plan, the 
exercise price of each option equals the market price of the Company's stock 
on the date of grant, and an option's maximum term is 10 years. Options are 
granted at various periods during the fiscal year under both plans and vest 
over 5 years.

SFAS 123 requires the Company to provide pro forma information regarding net 
income and earnings per share as if compensation cost for the Company's stock 
option plans had been determined in accordance with the fair value based 
method prescribed in SFAS 123. 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 1997 and 
1998, respectively: dividend yield of .19% and .04%; an expected volatility 
of 21.6%; risk-free rates of 6.22%, 6.36%, 5.48% and 5.50% for the 1992 plan 
and risk-free rates of 6.66% and 5.62% for the 1994 plan; an expected life of 
5 years for the 1992 plan and an expected life of 5 years for the 1994 plan.

Under the accounting provisions of SFAS 123, the Company's net income and 
earnings per share would have been reduced as indicated below:

<TABLE>
<CAPTION>

(IN THOUSANDS EXCEPT PER SHARE DATA)                      1998         1997
---------------------------------------------------------------------------
<S>                                                 <C>          <C>
Net Income
  As Reported                                          $20,746      $19,372
  Pro Forma                                             20,275       19,087
  
Earnings Per Share
  As Reported                                             5.08         4.73
  Pro Forma                                               4.96         4.66

</TABLE>

A summary of the Company's two fixed stock option plans as of November 30, 
1997 and 1998, and changes during the years ending on those dates is 
presented below:

<TABLE>
<CAPTION>

                                        Number of          Weighted Average
                                           Shares            Exercise Price
---------------------------------------------------------------------------
<S>                                     <C>                       <C>
Outstanding at November 30, 1996           292,259                   $39.22
  Granted                                   55,000                    48.54
  Exercised                                (20,375)                   33.86
  Forfeited                                 (5,150)                   38.60
                                          ----------
Outstanding at November 30, 1997           321,734                    39.57
                                          ----------
Options Exercisable at Year-end            172,359                    36.96
                                          ----------
Weighted-Average
  Fair Value of Options
  Granted During the Year                                             15.27

Outstanding at November 30, 1997           321,734                    43.02
  Granted                                   78,500                    57.14
  Exercised                                (24,625)                   37.38
  Forfeited                                 (7,125)                   42.50
                                          ----------
Outstanding at November 30, 1998           368,484                    43.40
                                          ==========
Options Exercisable at Year-end            197,359                    38.11
                                          ==========
Weighted-Average
  Fair Value of Options
  Granted During the Year                                             18.27

</TABLE>

<PAGE>

The following table summarizes information about stock options outstanding as 
of November 30, 1998:

<TABLE>
<CAPTION>

                                  Number    Weighted Average        Weighted
Range of                  Outstanding at          Remaining          Average
Exercised Prices       November 30, 1998   Contractual Life   Exercise Price
----------------------------------------------------------------------------
<S>                          <C>                   <C>             <C>
  $    0 to $35.00                41,925               5.17           $32.37
   35.00 to  45.00               202,059               6.53            38.93
   45.00 to  55.00                46,500               8.19            49.75
   55.00 to  65.00                78,000               9.49            57.13
                                ---------
       0 to  65.00               368,484               7.21            43.40
                                =========

</TABLE>

<TABLE>
<CAPTION>

                                            Number                 Weighted
Range of                            Exercisable at                  Average
Exercised Prices                 November 30, 1998           Exercise Price
---------------------------------------------------------------------------
<S>                                     <C>                       <C>
$     0  to $35.00                          39,800                   $32.34 
  35.00  to  45.00                         145,934                    38.76
  45.00  to  55.00                          11,625                    49.75
  55.00  to  65.00                              --                       --
                                          --------
      0  to  65.00                         197,359                    38.11
                                          ========
</TABLE>

NOTE SEVENTEEN: CONTINGENCIES & COMMITMENTS
An action was filed in 1992 in the U.S. District 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 the repair 
or replacement of those siphons at a claimed estimated cost of $146.7 
million. 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 has 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 its aforementioned 
action in the U.S. District for the District of Arizona. The Contracting 
Officer's final decision has been 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.

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 has recorded 
provisions deemed adequate by the Company to permit it to continue to 
vigorously defend its position in this matter. 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 financial position of the Company 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. 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.

At November 30, 1998, the Company had reserves of $8,923,000 for potential 
environmental liabilities and $7,215,000 associated with product liability 
and other legal claims.

NOTE EIGHTEEN: CAPITAL STOCK
The certificate of incorporation in Delaware authorizes 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, 1998, the Company had no shares of preferred 
stock or series A junior participating cumulative preferred stock 
outstanding. 

The Company has a Stockholders' Rights Agreement, which entitles stockholders 
to purchase common stock if a party acquires 15% or more of the Company's 
common shares or announces a tender offer for at least 15% of its common 
shares outstanding.

NOTE NINETEEN: BUSINESS SEGMENTS & GEOGRAPHIC AREAS
Financial information for 1998, 1997 and 1996, with respect to the various 
business segments of the Company, appears on pages 34 and 35.

QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the years ended November 30, 1998 and
1997, follow:

<TABLE>
<CAPTION>

                                                               1998
                                       ------------------------------------------------
(IN THOUSANDS                                First      Second        Third      Fourth
EXCEPT PER SHARE DATA)                     Quarter     Quarter      Quarter     Quarter
---------------------------------------------------------------------------------------
<S>                                    <C>         <C>          <C>         <C>
Sales                                     $102,526    $136,974     $155,707    $156,939
Gross Profit                                24,202      36,326       38,142      40,542
Net Income (Loss)                             (940)      4,490        6,178      11,018
Diluted Net Income per Share                  (.23)       1.09         1.51        2.71

<CAPTION>

                                                               1997
                                       ------------------------------------------------
(IN THOUSANDS                                First      Second        Third      Fourth
EXCEPT PER SHARE DATA)                     Quarter     Quarter      Quarter     Quarter
---------------------------------------------------------------------------------------
                                       <C>         <C>          <C>         <C>
Sales                                     $108,261    $131,525     $146,323    $147,397
Gross Profit                                27,683      35,208       38,490      34,302
Net Income                                     938       5,270        7,050       6,114
Diluted Net Income per Share                   .23        1.30         1.72        1.48

</TABLE>

The Company traditionally experiences lower sales during the first fiscal
quarter because of seasonal patterns associated with weather and contractor
schedules.

PER SHARE DATA

<TABLE>
<CAPTION>


                                                Stock Price               Dividends
                                          ----------------------------------------------
Quarter Ended                                 1998        1997        1998         1997
----------------------------------------------------------------------------------------
<S>                      <C>           <C>         <C>            <C>          <C>
February 28                -High          $ 64 5/8    $ 52 1/2       $ .32        $ .32
                           -Low             57 1/8      46 3/8
May 31                     -High            62 3/4      55 1/2         .32          .32
                           -Low             54 3/4      47 5/8
August 31                  -High            60 1/8      58 5/8         .32          .32
                           -Low             37 5/8      54
November 30                -High            39 9/16     70             .32          .32
                           -Low             33 3/8      58 1/8

</TABLE>

<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

TO THE STOCKHOLDERS & THE BOARD OF DIRECTORS, AMERON INTERNATIONAL CORPORATION:

We have audited the accompanying consolidated balance sheets of Ameron 
International Corporation (a Delaware corporation) and subsidiaries as of 
November 30, 1998 and 1997, 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, 1998. 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 generally accepted auditing 
standards. 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 the consolidated financial statements referred to above 
present fairly, in all material respects, the financial position of Ameron 
International Corporation and subsidiaries as of November 30, 1998 and 1997, 
and the results of their operations and their cash flows for each of the 
three years in the period ended November 30, 1998, in conformity with 
generally accepted accounting principles.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP
Los Angeles, California
January 21, 1999

REPORT OF MANAGEMENT

We have prepared the accompanying consolidated financial statements and 
related financial information of Ameron International Corporation and 
subsidiaries in conformity with generally accepted accounting principles 
appropriate in the circumstances. Management is primarily 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 judgments of current 
conditions and circumstances.

Ameron maintains a system of internal accounting 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, Arthur Andersen 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 this 
process, they evaluate the system of internal accounting controls to 
establish the audit procedures. 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, Arthur Andersen 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. Arthur Andersen LLP 
and the internal auditors have full and free access to the members of the 
Audit Committee.



<TABLE>
<S>                                                                                 <C>

/s/ James S. Marlen                                                                 /s/ Gary Wagner

JAMES S. MARLEN                                                                     GARY WAGNER
Chairman of the Board, President & Chief Executive Officer                          Senior Vice President & Chief Financial Officer
</TABLE>
<PAGE>

BUSINESS SEGMENTS

Ameron classifies its business operations into four segments. The Coatings 
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 Concrete & Steel Pipe Group manufactures and supplies 
concrete and steel pressure pipe, concrete non-pressure pipe, protective 
linings for pipe, and fabricated products. The Construction & Allied Products 
Group manufactures and sells ready-mix concrete, sand and aggregates, 
concrete pipe and culverts, and concrete and steel lighting and traffic poles.

Intersegment sales were not significant. Income from reportable segments is 
exclusive of certain unallocated income and expense. Identifiable assets by 
segment are those assets that are used exclusively by such segment. 
Unallocated assets are principally cash, corporate property and equipment, 
and investments. Capital expenditures do not include plant and equipment for 
business acquisitions. A summary of sales, income (loss), assets, 
depreciation and capital expenditures by segment follows:


<TABLE>
<CAPTION>
                                                                           BUSINESS SEGMENTS
                                      ---------------------------------------------------------------------------------------------
                                                     Fiberglass-    Concrete &     Construction &    Eliminations &
(DOLLARS IN THOUSANDS)                Coatings    Composite Pipe    Steel Pipe    Allied Products       Unallocated    Consolidated
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                   <C>         <C>               <C>           <C>                <C>               <C>
1998
  Sales                               $213,961       $105,633        $131,633        $102,066          $ (1,147)         $552,146
  Income (loss) before interest
     and income taxes                    3,238(1)      14,211          19,475          10,721              (651)(2)        46,994
  Identifiable assets                  169,331         84,126         113,554          55,217            77,991           500,219
  Capital expenditures                   4,755          5,700          19,365           2,898                26            32,744
  Depreciation                           4,616          3,622           4,084           4,176             1,173            17,671
-----------------------------------------------------------------------------------------------------------------------------------
1997
  Sales                               $190,690       $102,690        $146,069        $ 94,858          $   (801)         $533,506
  Income (loss) before interest
     and income taxes                   16,775         12,293          15,172           9,919           (11,058)           43,101
  Identifiable assets                  119,716         78,683          91,088          60,954            82,784           433,225
  Capital expenditures                   4,259          8,466           7,383           3,253             1,499            24,860
  Depreciation                           2,698          3,706           3,935           4,200             1,190            15,729
-----------------------------------------------------------------------------------------------------------------------------------
1996
  Sales                               $143,059       $104,070        $148,952        $101,794          $   (935)         $496,940
  Income (loss) before interest
     and income taxes                   10,073         10,052          17,936          10,680           (14,282)           34,459
  Identifiable assets                  106,917         76,610          82,811          60,906            84,422           411,666
  Capital expenditures                   4,475          2,876           2,411          14,490               975            25,227
  Depreciation                           2,435          3,804           4,072           4,487             1,280            16,078
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  INCLUDES CHARGE OF $5,860 FOR WRITE DOWN OF INVENTORY ASSOCIATED WITH A
     CONTRACTING MARKET AND A PROGRAM OF PRODUCT LINE CONSOLIDATION.
(2)  INCLUDES ASSET WRITE-DOWNS AND OTHER CHARGES OF $21,669 AND GAIN ON SALE OF
     INVESTMENT AND OTHER ASSETS OF $26,853, AS OUTLINED IN NOTES SEVEN AND
     NINE.

<PAGE>

GEOGRAPHIC AREAS

The markets served by the Coatings Group and the Fiberglass-Composite Pipe 
Group are worldwide in scope. The Concrete & Steel Pipe Group serves 
primarily the western United States. Ameron Hawaii operates exclusively in 
the State of Hawaii, and the Pole Products Division sells mainly in the 
continental United States. Ameron Hawaii and the Pole Products Division 
together comprise the Construction & Allied Products Group. Sales for export 
or to any individual customer did not exceed 10% of consolidated sales. 
Information with respect to the Company's geographic areas is as follows:


<TABLE>
<CAPTION>
                                                                    GEOGRAPHIC AREAS
                                          -----------------------------------------------------------------------
                                            United                               Investments &
(DOLLARS IN THOUSANDS)                      States       Europe       Other       Eliminations       Consolidated
-----------------------------------------------------------------------------------------------------------------
<S>                                       <C>          <C>          <C>          <C>                 <C>
1998
  Sales to unaffiliated customers         $401,580     $101,727     $48,839         $     --           $552,146
  Intercompany sales between 
     geographic areas                        9,748        1,389       9,685          (20,822)                --
                                          -----------------------------------------------------------------------
     Total sales                           411,328      103,116      58,524          (20,822)           552,146
  Income before interest
     and income taxes                       26,878        6,983       6,620            6,513             46,994
  Identifiable assets                      319,576       96,260      62,201           22,182            500,219
-----------------------------------------------------------------------------------------------------------------
1997
  Sales to unaffiliated customers         $434,839     $ 67,328     $31,339         $     --           $533,506
  Intercompany sales between 
     geographic areas                        1,829        7,189       2,507          (11,525)                --
                                          -----------------------------------------------------------------------
     Total sales                           436,668       74,517      33,846          (11,525)           533,506
  Income before interest
     and income taxes                       29,638        2,838       6,635            3,990             43,101
  Identifiable assets                      315,776       55,839      27,833           33,777            433,225
-----------------------------------------------------------------------------------------------------------------
1996
  Sales to unaffiliated customers         $396,904     $ 64,634     $35,402         $     --           $496,940
  Intercompany sales between 
     geographic areas                        4,705          932       5,637          (11,274)                --
                                          -----------------------------------------------------------------------
     Total sales                           401,609       65,566      41,039          (11,274)           496,940
  Income before interest
     and income taxes                       22,556        1,579       8,026            2,298             34,459
  Identifiable assets                      288,017       61,951      27,976           33,722            411,666
-----------------------------------------------------------------------------------------------------------------
</TABLE>